Heinz Boss Unveils Lackluster Earnings, Defends Strategy

02 March 2006

Conscious of the gauntlet hurled at his feet by interventionist shareholder Nelson Peltz, H J Heinz chairman/president/ceo William R Johnson found scant encouragement in the lackluster set of fiscal Q3 numbers posted Tuesday by the global foods manufacturer.

In 1999, Johnson nailed his colors to the mast of core product focus, claiming this would transform the company from a decentralised collection of 'unaligned autonomous affiliates' into one managed by six core global categories: ketchup and sauces; frozen foods; tuna; beans and pasta meals; infant foods; and petfoods [WAMN: 01-Feb-99].

This, he averred, would save $200 million annually.

But six years on, Johnson's plan has yet to deliver. And restless shareholders, led by Peltz, are baying for management heads to roll.

His back to the wall, Johnson struck a Churchillian pose: "Rest assured, we'll work this plan relentlessly because I'm not satisfied with the shareholder returns we've seen to date.

"Our performance in recent years has put us in the middle tier of the food group, and nobody is more committed than I am to dramatically improve total value."

The threatened challenge from Peltz could materialize as early as the end of this week when the deadline expires for shareholders to file proposals for inclusion in Heinz's proxy material for mailing in advance of the annual meeting.

Meantime, Johnson's satisfaction rating will not be improved by Heinz' results for its fiscal third quarter.

Net income fell 23% year-on-year to $116.6 million (€97.78m; £66.49m), or 35 cents a share, from $152.4m (43 cents a share). The decline in net income arose from a 43% rise in interest expenses and a $47.4m charge for asset disposal.

Data sourced from Financial Times Online; additional content by WARC staff