Heinz Marketing Spend Depresses Profits

15 March 2002

High expenditure on marketing eroded profits by 25% at food giant H J Heinz in its fiscal third quarter.

Net earnings slipped to $201.7 million (€228.3m; £141.6m) from $270.5m twelve months earlier. Total sales increased 12.4% to $2.7 billion, while revenues excluding acquisitions grew 3.3% – proof, said Prudential Securities analyst John McMillin, that its marketing spend is working.

Heinz has paid $1.5bn in buying brands in the last year-and-a-half. Acquisitions include Mexican food line Delimex, pasta sauce and soup range Classico and Popper’s snack foods.

Continued McMillin: “Heinz has not yet begun to reap the synergies of new acquisitions like pasta sauce and frozen foods. They need to improve execution of the integration of those acquisitions.”

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