H.J. Heinz Company (NYSE:HNZ), which announced its Q3 earnings on 17 February, posted healthy revenue growth buoyed by the impressive growth of its flagship ketchup Heinz. The company continues to grow at a healthy rate in the Asia/Pacific region although the growth rate declined in this quarter. Total revenues for the quarter stood at $2.91 billion, up 7.2% from the same quarter last year. Net income grew 4% to $284.7 million or $0.89 per share. However, excluding special items, the company posted a 12.3% growth in net income at $0.95 per share.
Asia/Pacific Continues To Do Well
The Asia/Pacific region posted a 8.2% revenue growth although the growth rate has retarded this fiscal year primarily due to flagging sales in Australia. However the company reported that Australia, while down, has improved sequentially this fiscal year. Sales growth in Asia/Pacific was driven primarily by Master brand in China and ABC sauces and drinks in Indonesia. Operating income surged 25% to $54 million. CEO William Johnson expects business to double in China in the next three years. The company will also benefit from the tragic tainted milk incident in China, the effect of which should be more visible in the subsequent quarters. The infant/nutrition division contributes 13.3% to the overall stock price as per our estimates.
Global ketchup sales witnessed a 8.6% growth primarily driven by growth in Latin America and in U.S. foodservice. Ketchup and Sauces sales stood at $1.26 billion, contributing 44% to the total revenues.
H.J. Heinz also topped the overall satisfaction index released by American Customer Satisfaction Index (ASCI) for the 12th consecutive year. There is no brand name more ubiquitous than Heinz in ketchup and we expect its market share to rise gradually in the global ketchup, condiments and sauces market
We have a $54.50 Trefis price estimate for H.J. Heinz Company. We are in the process of revising our estimates to incorporate Q3 earnings.