As markets brace themselves to react to higher food costs due to rising commodity prices, Heinz, Kroger, and Wendys/Arbys posted earnings before the bell on Thursday. While Heinz and Kroger grew sales as consumers bought more condiments, fuel, and food products, Wendys/Arbys saw its revenues fall but its losses narrows as it lowers costs and looks to spin off the Arbys brand.
Heinz, the worlds largest producer of ketchup and other condiments by revenue, posted a very strong third quarter, with net income up 19.8% to $274 million, or 84 cents, 2 pennies above Wall Streets consensus forecasts.
The companys reported sales grew 1.5% to $2.7 billion, while emerging markets sales expanded by a stellar 14.6% to make up 16% of Heinzs total sales. marking the 23 consecutive quarter of sales growth, the company announced that higher volumes and net pricing more than offset rising commodity prices. China, Russia, and Indonesia were strong contributors to the results.
Heinz also announced it was acquiring an 80% stake in Brazils Coniexpress S.A., manufacturer of condiment maker Quero. With annual sales of approximately $325 million, the Quero brand will allows Heinz to grow its presence in one of the most dynamic countries in Latin America, Brazil, giving it a foothold to take on the region.
For the full fiscal year 2011, Heinz upped its guidance, with EPS now expected in the $3.04 to $3.10 range, from the $2.95 to $3.05 range. full year sales growth will be about 2% to 3%.
Grocery chain Kroger also performed well in the quarter. Posting Q4 net income up $278.8 million, or 44 cents, the company grew profits 9.2%. Excluding one-time items, the company posted an EPS of 46 cents, 2 pennies above the consensus forecast.
Kroger sells fuel in about 1,000 of its stores. Including fuel, sales expanded by 7.4% to $19.9 billion in the fourth quarter; excluding fuel the gain was 4.2% over the same period a year ago. While grocery chains are facing rising costs for various food products, given the surge in commodity prices, prices are being passed on to the consumer, according to the AP.
While its board authorized a $1 billion stock repurchase program, Kroger provided 2011 full year guidance. Expecting to take shareholder return to the 1.5% to 2% range including dividend payments, the company expects net earnings in the $1.8 to $1.92 per share range, as opposed to $1.74 per share for the full year 2010. same supermarket sales growth, excluding fuel, is forecasted in the 3% to 4% range, which grew 2.8% in 2010.
Completing the food-related earnings for the day, fast food company Wendys/Arbys posted fourth quarter earnings, narrowing its losses and slightly improving its same-store sales. Net losses fell to $10.8 million, or 3 cents, as opposed to a loss of $13.6 million or 3 cents for the same period a year ago. (Read Global Food Prices Hit All Time High).
The company, which has announced it is exploring strategic alternatives for Arbys Restaurant Group including a sale of the brand, saw same-store sales grow 0.2% at Wendys restaurants and 2% at Arbys restaurants. Total revenue fell to $840.7 million, down from $900.9 million for the same period a year ago.
Wendys/Arbys is attempting to reposition its brand to drive increased sales, and expects full year 2011 EBITDA in the $345 million to $355 million range, assuming the sale of Arbys and same-store growth of 1% to 3%, compared with full year EBITDA for 2010 of $396.9 million.
On a day where all three major U.S. equity indices were deeply in the green by midday in New York, all three companies were trading the green. Wendys/Arbys were in the lead, up 5.7% or 27 cents to $5.01 by 12:13 PM. Kroger was up 2.1% or 48 cents to $23.00 while Heinz gained 0.4% or 21 cents to $49.19.
0 Comments
Posts
