Sales decline at Heinz; company focuses on cost-cutting
Sales dropped 4 percent at H.J. Heinz Co. in the second quarter but profit increased because of aggressive cost-cutting by the investment firms that took Heinz private last year.
The Downtown-based food company reported sales of $2.73 billion in the 13 weeks ended June 29, compared with sales of $2.85 billion in the 13 weeks ended June 23, 2013.
The ketchup maker is “discontinuing unprofitable sales” and reducing expenses so that it can “increase investment in our brands and accelerate innovation,” according to a written statement from spokesman Michael Mullen. He did not specify how much of the sales decline was from eliminating unprofitable business.
Under ownership by Warren Buffett's Berkshire Hathaway and investment firm 3G Capital, which acquired Heinz for $28 billion in June 2013, expense reduction has become a major focus. Administrative expenses were down 16 percent in the quarter to $511.1 million, compared with $605.2 million last year.
The company laid off office workers in North America, including hundreds in Pittsburgh, and closed factories in the United States, Canada and Europe.
This year it offered remaining Pittsburgh employees the chance to accept a buyout and leave if they weren't happy with the corporate culture established by 3G.
Officials have declined to say how many workers accepted the offer.
As of June 29, Heinz said it eliminated 3,800 corporate positions across its global business, according to a Securities and Exchange Commission filing Tuesday that reported the second-quarter financial results. Previously, Heinz disclosed that 3,400 positions were eliminated as of Dec. 29. The company also has eliminated 1,600 factory jobs in North America.
Before the buyout offer, Heinz employed about 775 people in Pittsburgh. The company had 28,700 total employees at the end of 2013.
The cost-cutting boosted Heinz's bottom line. Net income was $126.7 million in the quarter, compared with a net loss of $123.9 million a year ago. The year-ago results included merger-related expenses of $200.2 million.
“Heinz remains on track to deliver our goals for 2014,” Mullen said. “We are committed to driving efficiencies that will strengthen our business.”
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Pa., W.Va., Ohio to coordinate efforts to attract shale-related business
- Education tech firm Acrobatiq does software to supplement college learning
- As craft fades, personal touch helps Northway Shoes & Repair thrive
- Tesla investors leery as shares, targets plummet
- Kombucha producers resist call to indicate alcohol content on labels
- Chesapeake Energy appoints Brad Martin chairman of the board
- Safety of credit cards up to banks
- Budweiser brewer AB InBev wants to take over SABMiller for $108.2B
- Wabtec buying Australian sensor maker Track IQ
- Class action lawsuit in California seeks Volkswagen buyback
- CMU showcases its lengthy list of fledgling companies at venture event