H.J. Heinz Corp. II announced financial results for the first quarter of 2015, which reflect solid underlying business performance.
Q1 2015 financial summary
- Organic net revenues declined 4.5 percent, primarily driven by the unfavorable timing impact of customer inventory buildup due to prior year SAP implementation
- Organic adjusted EBITDA grew 0.3 percent despite the unfavorable timing impact of prior year SAP implementation
- Company reaffirms expectation for 2015 adjusted EBITDA growth, including an expected unfavorable impact from foreign currency
“We continued to make strong progress on the transformation of our business during the first quarter of the year,” said Heinz CEO Bernardo Hees. “First quarter results were consistent with our expectations and we remain on track to deliver on our internal targets for the year. We are confident that our cost discipline and investment in our brands will continue to drive sustainable and profitable growth.”
Net revenues were $2.48 billion in the first quarter, down 11.5 percent versus the year-ago period, driven by organic net revenue decline of 4.5 percent and an unfavorable currency impact of 7.0 percent. The decline in organic net revenues primarily reflected a comparison with unusually high product shipments in the prior year period, as the company shipped safety stock to retailers ahead of the commencement of SAP implementation efforts in North America in Q2 2014, as well as the ongoing impact of product rationalization. Ketchup and Infant organic revenues grew by single-digits globally, led by Venezuela and Russia, and the company’s Soy Sauce business in China grew by double-digits. However, US revenues were impacted by a double-digit decline in the Frozen Meals category, and Europe revenues were impacted by category declines in the UK and in Italy.
Adjusted EBITDA of $651 million was down 5.4 percent versus the year-ago period, driven by an unfavorable currency impact of 5.8 percent and the impact of the SAP implementation in North America. Organic adjusted EBITDA was essentially flat versus the year-ago period. Current quarter results benefited from net price gains and cost savings mainly driven by zero-based budgeting and manufacturing footprint optimization.
Full year 2015 outlook
For full-year 2015, the company continues to expect that adjusted EBITDA will increase on a nominal basis relative to full-year 2014 EBITDA of $2.84 billion despite an anticipated ongoing unfavorable impact from foreign currency. This performance will be mainly driven by the continuation of our cost savings programs, net price gains in developed markets, and category growth in emerging markets.