Advertisement

Heinz May Sell Units in Europe

From Associated Press

H.J. Heinz Co. said Tuesday that it was considering trimming European operations and might sell off a host of brands for about $1 billion in a move to focus operations on its ketchup and other core products.

The Pittsburgh-based condiment and food maker said the businesses that it might sell accounted for about $1.4 billion in yearly sales and included its seafood, vegetable and frozen-food businesses in Europe and its Tegel poultry unit in New Zealand.

If Heinz executes the sales, the company’s European operations would generate annual sales of $2.5 billion, or 30% of overall revenue. The changes are similar to actions the company took in North America and Australia.

Heinz has hired UBS and JPMorgan Chase & Co. for the possible divestitures. Heinz expects to see proceeds of about $1 billion from the potential sales, to be used for stock repurchases and debt reduction.

Advertisement

Heinz employs 8,950 people, excluding its vegetable unit, at the European businesses and the Tegel plant being considered for sale, said spokeswoman Debbie Foster. Heinz has 101 plants and, if the sales go through, would have 84 plants remaining, she said.

The company said it expected to record extraordinary costs of $100 million in fiscal 2006, including the restructuring expenses. Excluding such items, Heinz maintained a forecast for earnings of $2.35 to $2.45 a share from continuing operations for the fiscal year ending in April. However, higher fuel costs and a stronger dollar are likely to put results at the lower end of that range, Heinz said.

Revenue should grow 4% to 6% for the year, the company said.

Analysts surveyed by Thomson Financial are looking for full-year earnings of $2.39 a share with sales growing 6% to $9.47 billion.

Advertisement

After the restructuring, the company will focus on three areas: ketchup, condiments and sauces; meals and snacks; and infant nutrition.

Heinz shares fell 28 cents to $35.14.


Advertisement