NEW YORK (AP) — A significantly lower tax rate helped push net income at Heinz up 22 percent in the second quarter, in addition to gains in emerging markets.
Organic sales, which exclude acquisitions and the impact of foreign currency exchange rates, rose 3.3 percent. Those sales were driven by emerging markets, which had blistering organic sales growth of 13.2 percent. Emerging markets made up 23 percent of total sales.
It was the 30th consecutive quarter of organic sales growth, according to the Pittsburgh company.
Still, shares slipped in early trading because the company stuck to its guidance for the year while analysts that follow the company have grown more pessimistic about the upcoming quarter. Consensus estimates for 99 cents per share as recently as July have fallen to 93 cents.
For the period ended Oct. 28, the world's biggest ketchup maker earned $289.4 million, or 90 cents per share. That's compared with $237 million, or 73 cents per share, in the year ago period. Analysts on average expected a profit of 88 cents per share, according to FactSet.
Revenue edged up less than 1 percent to $2.83 billion, but was shy of the $2.85 billion Wall Street expected.
Marketing expenses rose 13.4 percent in the period, not including the impact of currency exchange rates. But the cost of goods sold declined to $1.81 billion, from $1.85 billion a year ago. And the effective tax rate for the period was 9.6 percent, compared with 18.1 percent a year ago. The full-year tax rate is expected to be around 20 percent.
In North America, sales edged up 0.1 percent $795 million, driven by Heinz Gravy and Ketchup, Classico pasta sauces and Ore-Ida frozen potatoes.
The soft results were despite significant marketing increase, noted Ken Goldman, an analyst with J.P.Morgan.
In Europe, sales declined 4.2 percent to $808 million because of the impact of foreign currency exchange rates and divestitures. Sales in Asia rose 2.3 percent to $606 million., boosted by Master soy sauce and Heinz Ketchup and sauces in China. In other parts of the world, including Brazil and Venezuela, sales rose 8.6 percent to $270 million. When not including the impact of foreign exchange rates, the company said sales rose 19.8 percent.
For its fiscal 2013, the company stood by its guidance of earnings per share growth of 5 percent to 8 percent from continuing operations and not including one-time costs.
Shares of H.J. Heinz Co. fell 2 percent to $57.28 in afternoon trading.