Earnings Preview: H.J. Heinz Co.

AP News
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Posted: Nov 23, 2009 3:03 PM

H.J. Heinz Co. is scheduled to report earnings for its fiscal second quarter on Tuesday before the market opens. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Heinz, like most food companies, has benefited during the economic downturn as consumers began eating at home more often to save money.

The company upped its marketing during the recession to keep customers loyal to its brands and has seen its sales volume rise.

However, fluctuating commodity prices and value of the dollar has posed some challenges for the company's profitability.

Heinz, based in Pittsburgh, does much of its business overseas and the stronger dollar lowered its profit significantly in prior quarters, but may lift it in the second quarter as the currency has weakened.

Additionally, the price of some key ingredients _ like tomatoes _ hurt its profitability but lower prices on other ingredients have helped the food maker. Fluctuating price of ingredients will be an ongoing issue for the company, which makes Heinz ketchup, Weight Watchers meals and Ore-Ida french fries.

BY THE NUMBERS: Analysts surveyed by Thomson Reuters expect the company to earn 69 cents per share on revenue of $2.63 billion for the quarter.

ANALYST TAKE: Deutsche Bank analyst Eric Katzman said proper pricing, cost-saving and core sales growth by the company, along with more favorable foreign exchange rates are likely to be the drivers for the quarter but may be partially offset by inflation. Katzman reaffirmed a "hold" rating on the company's shares.

WHAT'S AHEAD: Investors will want to know what approach Heinz will take to maintain or increase sales amid the larger global economic pressures.

STOCK PERFORMANCE: Shares of Heinz rose nearly 5 percent during the quarter and nearly 7 percent in the past 52 weeks.