Heinz Net Income Up On Quarter

NEW YORK - Aug 24/07 - SNS -- H. J. Heinz Company reported net income of U.S. $205.3 million on sales of $2,248.3 million for the first quarter ending August 1, compared to a net of $194.1 million on sales of $2,059.9 million during the same three month period last year.

The strong organic sales growth was driven primarily by worldwide ketchup (up 13%), beans in the UK (up 25%), soups (up 24% worldwide) and Smart Ones(R) meals in North America (up 25%). The strong sales growth and product innovation was supported by continued investment in marketing (up 25%) and R&D (up 14%) during the first quarter.

Marketing was invested behind a line of products ranging from Smart Ones meals in North America to Heinz(R) soup in the UK and Long Fong(TM) products in China. Increased R&D helped Heinz add to its already robust pipeline of new products with a particular focus on health and wellness.

One of the notable marketing initiatives in the quarter was Heinz's Top This! TV campaign. This contemporary Web-based campaign asked U.S. consumers to create the next Heinz Ketchup television commercials. More than 6,000 people submitted home-made commercials, which to date have been viewed more than 2 million times on YouTube. The public will begin online voting for their favorite ads on or about August 27, and Heinz will announce the winner in September. Consumer response was so overwhelming that Heinz has decided to conduct a follow-up contest beginning in October.

Sales of the Company's top-15 brands grew 11% from the year-ago quarter, as sales of ketchup rose 13% and sales of beans and soups increased approximately 25%. Sales of Smart Ones, a line of healthy entrees, rose 25%, buoyed by the successful launch of Smart Ones(R) Anytime Selections(TM). In addition, sales in emerging markets (Russia, India, China, Indonesia, Poland (RICIP) and Latin America) grew 15%. Foreign exchange contributed 4.6% to overall sales growth.

Commodity costs in the first quarter rose 4.7%, reflecting higher costs for dairy, sweeteners and oils. Heinz responded to rising commodity costs with price increases on average of 2.8% in the quarter and continued strong productivity gains.

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