Viterra profit jumps 80 percent on big Australia crop

Viterra profit jumps 80 percent on big Australia crop

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WINNIPEG, Manitoba (Global Markets) - Viterra Inc (VT.TO) reported an 80 percent rise in quarterly net profit on Thursday, bolstered by brisk South Australian crop shipments.

Canada's biggest grain handler said record-high crop shipments from South Australia boosted earnings even as wet weather delayed planting in Western Canada and hurt sales of farm products like seed and chemicals.

Viterra's Australia crop-handling network of elevators and port terminals has given the company a geographic hedge against weather-related crop problems in Canada since it acquired the former ABB Grain in 2009.

"From a strategic perspective, our geographic diversification has delivered to expectations," said CEO Mayo Schmidt.

Regina, Saskatchewan-based Viterra said it had achieved its forecast C$30 million ($30.6 million) in synergies from the takeover six months ahead of schedule.

The company reported a net profit of C$33.1 million ($33.8 million), or 9 Canadian cents a share, for the second quarter ended on April 30, up from C$18.4 million, or 5 Canadian cents a share, a year earlier.

Revenue rose 33 percent to C$2.70 billion.

Analysts had expected earnings of 17 Canadian cents a share and revenue of C$2.3 billion, according to Thomson Global Markets I/B/E/S.

Viterra also declared a semiannual cash dividend of 5 Canadian cents per share, payable July 28. The company's dividend rate is currently 10 Canadian cents per year.

(Reporting by Rod Nickel in Winnipeg and Aftab Ahmed in Bangalore; Editing by Savio D'Souza and Lisa Von Ahn)

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Heinz sales miss; updates forecast assumptions

Heinz sales miss; updates forecast assumptions

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(Global Markets) - H.J. Heinz Co (HNZ.N) is turning to smaller, less-expensive packages for its namesake ketchup and sauces and bringing baked beans back to the U.S. market as it tries to generate more sales in a tough economy.

The moves come as the foodmaker posted weaker-than-expected quarterly sales and lowered its expectation for its full-year gross margin. Its shares fell 3 percent.

The maker of Heinz ketchup, Ore-Ida frozen potatoes and other packaged foods cited sales weakness in Australia and its U.S. foodservice business, which it said hasn't recovered as quickly as expected.

In an effort to adapt to a more difficult operating environment, particularly in developed markets, Heinz said it will close three more factories around the world in addition to closings it already announced.

The closings will cost the company 15 cents more per share this year, on top of one-time charges of 35 cents per share already announced.

Heinz will also introduce a range of smaller-size, less expensive products in the United States that will give it a bigger presence in dollar stores, where cash-strapped consumers are doing more of their food shopping.

"Developed markets are experiencing low consumer confidence, high unemployment and economic uncertainty," said Heinz Chief Executive William Johnson.

Heinz's quarterly profit beat expectations by a penny, but it did not raise its full-year forecast. The earnings forecast also now relies on a lower tax rate than previously thought.

"Heinz trades at a premium to the group, and these are not premium results," said RBC Capital Markets analyst Edward Aaron.

The company's shares were down $1.68, or 3.2 percent, at $51.14 in late morning trading.

$1 KETCHUP, $2 FRIES

Heinz said net income fell to $237 million, or 73 cents per share, in its fiscal second quarter, ended on October 26, from $251.4 million, or 78 cents per share, a year earlier.

Excluding items, it earned 81 cents per share. On that basis, analysts on average were expecting 80 cents per share, according to Thomson Global Markets I/B/E/S.

Sales rose 8 percent to $2.83 billion, but fell short of analysts' average estimate of $2.91 billion.

Sales, excluding the effect of acquisitions and foreign exchange, rose 1.5 percent, as a 2.9 percent decline in volume partly offset a 4.4 percent benefit from higher prices.

To appeal to U.S. consumers with tight grocery budgets, Heinz is launching a 10-ounce pouch of ketchup for 99 cents, a nine-ounce package of mustard for 99 cents and a one-pound package of Ore-Ida French fries for $1.99.

CEO Johnson said the smaller packages are expected to boost sales since they should appeal to consumers who were not buying Heinz' products before, such as dollar store shoppers. They should also be largely neutral or beneficial to its profit margins, he said.

In addition, Heinz is bringing back its canned baked beans to the U.S. market after an absence of several decades.

"We believe this is the right time for the return of this convenient, nutritious, and value-oriented classic," Johnson said. "Consumers have been turning to comfort foods during the recession.

The company said it is on track to meet its goal for fiscal 2012 earnings of $3.24 to $3.32 per share, excluding items.

But compared with its assumptions in May, when it first gave the forecast, Heinz said it now expects a lower gross margin, due to higher commodity inflation and weak sales in Australia and U.S. Foodservice, offset by stronger results in emerging markets and Britain, reduced discretionary spending, lower interest expense and a lower tax rate.

In the latest quarter, sales from emerging markets rose nearly 16 percent organically and accounted for 20 percent of total sales.

Heinz said higher costs for ingredients like beans, sweeteners and packaging led to a 10 percent increase in costs in the second quarter, which it said was the "high water mark" for the year. It forecast a full-year commodity cost increase of 7.5 percent.

(Reporting by Martinne Geller; Editing by Derek Caney, Steve Orlofsky and Gunna Dickson)

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Lululemon profit and forecast robust, shares rise

Lululemon profit and forecast robust, shares rise

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TORONTO (Global Markets) - Yoga- and leisure-wear retailer Lululemon (LLL.TO) (LULU.O) boosted its yearly profit forecast on Friday after strong online and in-store sales helped its earnings top expectations for yet another quarter.

Shares in the company ended up 4.89 percent at C$88.00 in Toronto and up 4.41 percent at $89.94 in New York, standing out amid declines of more than 1 percent in both markets.

Vancouver-based Lululemon warned last quarter that it did not have enough product to meet strong demand for its trendy apparel, which now includes running and cycling gear, and that could limit growth in its fiscal first quarter.

But earnings per share came in 8 cents higher than analysts had forecast.

"I'm not surprised that they had a great quarter because our checks had been very, very positive," said Jennifer Milan, an analyst at Sterne, Agee & Leach. "But I was surprised at the level of the beat, given the fact that they've had inventory constraints for much of the quarter."

Inventories hit a low point toward the end of February, but arrangements for early delivery in April helped boost sales, Chief Financial Officer John Currie said in a call with analysts.

Comparable stores sales rose 16 percent in the first quarter. Currie said sales would have been up around 20 percent with more robust inventories.

Net income in the quarter to May 1 rose to $33.4 million, or 46 cents a share, up from a year-earlier profit of $19.6 million, or 27 cents a share.

Analysts on average had forecast earnings of 38 cents a share, according to Thomson Global Markets I/B/E/S. The company has consistently beaten earnings expectations, helping its shares more than double in value over the past year.

Revenue for the company, which has stores in Canada, the United States and Australia, surged 35.1 percent to $186.8 million.

Gross profit rose 48 percent to $109.7 million.

OUTLOOK STRENGTHENED

Lululemon forecast second-quarter earnings of 42 cents to 44 cents a share on revenues of $200 million to $205 million. For the full-year it forecast earnings of $2.10 to $2.16 a share, on revenue of $915 million to $930 million.

Last quarter, the company said it expected full-year net revenue of $885 million to $900 million and full-year earnings of $1.90 to $2.00 a share.

Analysts had forecast a profit of 40 cents a share in the second quarter, and $2.04 a share for the year.

"There had been some concern that sourcing costs would prove to be more aggressive than they initially thought, and they haven't been," said Sharon Zackfia, an analyst at William Blair & Company.

The revised forecast reflects the upside in the first quarter, which points to expectations by the company that input costs will remain in check, she said.

Lululemon has carved out a lucrative niche market and has become one of the few Canadian retailers that has successfully entered the U.S. market.

"This is a very, very early-stage growth company," Milan said. "They have extreme brand loyalty and given the fact that they've been inventory constrained, I don't think that we've really seen what true demand is for this company yet."

The retailer ended the quarter with 142 stores, compared to 128 a year earlier. It opened three stores in the United States and one in Australia. The company also opened an Ivivva store, aimed at the youth market, in Canada.

It plans to open six Lululemon stores in the United States and one in Australia in the current quarter.

The company also has community-oriented showrooms that offer fitness classes and incorporate local events.

Lululemon's growth has not gone unnoticed by other retailers, and long-established brands like Nike (NKE.N), Adidas (ADSGn.DE), Limited Brands Inc (LTD.N)-owned Victoria's Secret, and Gap Inc (GPS.N) have been stepping up the competition.

($1=$0.98 Canadian)

(Additional reporting by Euan Rocha and Julie Gordon; editing by Peter Galloway)

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