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Heinz sells UK frozen desserts business
by Alexandra Frean - 25/11/2009
"Heinz, the American food group, has sold its struggling private-label frozen desserts business in the UK, employing nearly 600 people in Devon and Warwickshire, to PoleStar Foods as part of a plan to shed non-core assets and focus on its branded products."
The sale, for an undisclosed sum, was completed last night and will result in a $33 million (£20 million) loss for Heinz in the third quarter of fiscal 2010. Heinz originally acquired the business from United Biscuits in 1999, as part of a £190 million deal that also included the Linda McCartney vegetarian brand and the San Marco pizza brand.
Heinz subsequently embarked on a divestiture programme to sell off the brands. Dave Woodward, president of Heinz UK & Ireland, said that the sale was a positive development for Heinz because it would allow the company to focus its resources on accelerating growth of its core branded business.
PoleStar is a newly formed company established by John Gibson and Keith Ellis, both former food company executives, with backing from the Israeli bank Leumi, specifically to acquire the Heinz Frozen Desserts business.
Mr Gibson said that he hoped that the business, which has turnover of about £40 million a year, could be built up with more hands-on management and new product development. He added that PoleStar would produce Heinz’s Weight Watchers range of food in the UK under licence from Heinz.
Heinz, based in Pittsburgh, Pennsylvania, and famed for its baked beans, reported the sale in its results for its quarter to October 28. Profits dropped to $231.4 million, or 73 cents per share, down 16 per cent from last year, when the company's results were boosted by a large currency gain.
The results exceeded analysts' forecasts for profits of 69 cents per share on revenue of $2.63 billion.
The company increased its sales of nutritional beverages in India, and had higher sales of ketchup and baby food in Latin America and Russia. Better pricing also boosted sales for the quarter.
Although fluctuating commodity prices and the dollar's value have posed some challenges for the company's profitability, Heinz raised its full-year earnings guidance, to a range of $2.72 to $2.82 per share for fiscal 2010. Its prior guidance was for earnings between $2.60 and $2.70 per share.
More Details: http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article6929771.ece
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