The food maker did earn more than Wall Street had expected and Heinz backed its financial forecast for the full-year. Heinz shares rose 2% to $38.73 in early trading.
Net income was $213 million, or 67 cents a share, compared to net income of $229 million, or 72 cents a share, a year ago. Sales dipped 4% to $2.47 billion.
Analysts had expected Heinz (HNZ 38.55, +0.60, +1.59%) to earn 62 cents a shares on sales of $2.45 billion, according to FactSet Research.
HNZ 38.55, +0.60, +1.59%
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Besides its ketchup, Pittsburgh, Pa.-based Heinz makes Weight Watchers, Smart Ones frozen meals, Ore-Ida frozen french fries and Lea & Perrins Worcestershire sauce.
Its products are sold in 200 countries and Heinz makes 60% of its annual sales and profit outside the U.S. This exposes the food maker to foreign currency changes, which can help or hurt its profit depending on the strength of the U.S. dollar.
For the quarter ended July 29, Heinz said foreign currency fluctuations cut its profit by 17% and sales by 9%. The food maker said the costs for tomatoes, tin plates used for its beans sold in the U.K., and potatoes rose.
The company said it has increased advertising spending for its ketchup, Classico pasta sauces and Heinz 57 sauces during the global economic downturn. Heinz said it has resisted matching deep discounts in the frozen food category, which has seen heavy promotional activity. Rivals in the frozen food aisle include Nestle and ConAgra.
Heinz said it reduced promotional activity for its ketchup, frozen meals, canned beans, and soups during the quarter. Overall, net pricing rose 6%, while total volume fell 4.3%. U.S. sales were led by Ore-Ida and new varieties of its T.G.I Friday's meals.
For its fiscal year that ends in April 2010, Heinz pegged sales growth between 4% and 6% and earnings per share growth of 5% to 8% "on a constant currency basis."
Before Thursday's report, Heinz shares were up 1% for the year, compared to a 4% gain for the S&P Food Producers Index.
