HJ HEINZ, the US food group run by Dr Tony O'Reilly, has recorded a drop in operating income from $1.29 billion to $760 million (£500 million) in the year to April 30th, 1997. The decline is attributed to the previously-announced reorganisation and restructuring plan.
If these costs are excluded, operating profit would have increased by 10.4 per cent to $1.42 billion and net income would have been $720 million an increase of 9.56 per cent, the company said.
Net a sales increased by 2.7 per cent to $9.36 billion. Heinz said sales were hit by the programme to eliminate certain trade promotions practices, primarily in North America.
Analysts said the companies share price rose slightly immediately after the results were released. Last night they were trading around $47, an all-time high.
Dr O'Reilly said the company was "off to a good start in fiscal 1998 and expects to deliver a double-digit earnings increase".
It has now been three months since we presented our ambitious restructuring plans, and I am pleased to say that many of these initiatives are well underway," Dr O'Reilly added.
His stated objective is to make Heinz "the number one food company in the US and one of the top three food companies in the world".
Dr O'Reilly said yesterday that the company had signed a definitive purchase agreement with McCain Foods to sell part of its frozen foods business and five factories for $500 million as part of an effort to dispose of non-strategic businesses. In addition, Heinz had announced the closure of ten factories worldwide, he added.
The Heinz plant in Dundalk will actually gain from the restructure, as it has been designated as the production base for the company's frozen food business in Europe. This will lead to 170 new jobs at the factory, manufacturing Weight Watchers products.
Already a £20 million investment programme supported by Forbairt is well underway at the plant, where employment is scheduled to reach 450 this month.
Dr O'Reilly is set to step down as chief executive of the multi-national once he has seen through the restructure. Sources close to Dr O'Reilly have said he is likely to relinquish the chief executive's role in two or three years' time, and that he is likely to be replaced by Mr William Johnson, currently the company's chief operating officer. Dr O'Reilly is likely to remain on as chairman of Heinz.
