Food Business News - Sep 27, 2005 - (Page 1)

FoodBusinessNews September 27, 2005 NEWS, MARKETS AND ANALYSIS FOR THE FOOD PROCESSING INDUSTRY Soup segment getting stronger Heinz to focus on core condiment, snack and infant nutrition businesses 17 Preserving functionality 20 Sauces in transition 30 MARKET WATCH PITTSBURGH - As part of a strategy to focus on its core businesses, The H.J. Heinz Co. is considering the sale of its European seafood, vegetable and frozen foods operations. If a sale is completed, Heinz will focus on three food categories - ketchup, condiments and sauces; meals and snacks; and infant nutrition. Plans to sell the European business were unveiled ahead of a meeting the same day in which Heinz executives discussed a comprehensive three-year strategy with securities analysts in Pittsburgh. When the plan is completed, the company expects to achieve annual revenue growth of 3% to 4%, earnings per share growth near the upper end of a 6% to 8% range off the fiscal year 2006 pro forma base, and operating free cash flow (cash from operations less capital expenditures) of approximately $800 million to $1 billion annually. "By the end of the third year, we will have completed one of the most dramatic turnarounds in the food industry," William R. Johnson, chairman, president and chief executive officer, said at the Sept. 20 meeting. "Our three core categories have higher intrinsic growth rates, much better competitive profiles and have shown much more Continued on Page 14 A busy week: In addition to detailing a major shift in corporate strategy for the H.J. Heinz Co. last week, William R. Johnson, chairman, president and c.e.o. of the company, participated in an official ribbon cutting at the company's new global innovation center in Pittsburgh (story on Page 11). U.S.D.A. assesses Hurricane Katrina damage nearly tripled since July. WASHINGTON - The Office of the Chief Economist of the U.S. Department of Agriculture (O.C.E.) estimated damage to crops and livestock across areas ravaged by Hurricane Katrina at $882 million. The preliminary assessment was issued Sept. 19 and based in part on crop forecasts contained in the U.S.D.A.'s September Crop Production report, which had been issued the week before. Fruit and vegetable production losses were substantial in Florida, estimated at $400 million, as were timber losses in Mississippi. These losses were reflected in the broad "other crops" category, which accounted for nearly $563 million in lost agricultural production. Fish and shellfish production took a severe blow. Losses in that sector were estimated at $151 million. Cane sugar production losses were estimated at $50 million. The O.C.E. report indicated that the counties in the states of Florida, Alabama, Mississippi, Louisiana and Tennessee subjected to hurricane force winds (74 miles per hour or greater) or tropical storm force winds (39 to 73 m.p.h.) from Katrina account for less than 1% of the total U.S. hog Continued on Page 18

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Food Business News - Sep 27, 2005