Deep cuts at Heinz boost 2014 profits to more than $650 million
H.J. Heinz Co. slashed more than 7,000 jobs since going private in 2013, the Pittsburgh ketchup maker disclosed Friday in a financial report that shows aggressive cost-cutting boosted profits.
In the first full year of ownership by Warren Buffett’s Berkshire Hathaway and Brazilian investment firm 3G Capital, Heinz reported net income of $657.1 million in 2014, according to a filing with the Securities and Exchange Commission.
The result compared with net income of $18 million the previous year — profit weighed down by one-time merger and restructuring costs.
“The management team and the board are pleased with the solid results and transformational progress that Heinz’s global workforce delivered in 2014,” Paulo Basilio, chief financial officer, said on a call to review finances.
Heinz employed 24,500 people at the end of last year, down 7,400 workers from its 31,900 employees in April 2013. Buffett and 3G, which is owned by a trio of Brazilian billionaires known for wringing efficiencies from companies they buy, closed their $28 billion deal for Heinz in June 2013.
About 400 office workers in Pittsburgh lost their jobs through layoffs in 2013. The company has closed factories in the United States, Canada and Europe.
Heinz generated higher profits in 2014 despite lower sales. It reported sales of $10.9 billion last year, down 4 percent from $11.4 billion the previous year. Last year’s results covered the 52 weeks ended Dec. 28, and compared to 53 weeks ended Dec. 24, 2013.
Basilio said sales declined in part because of weak demand for frozen food generally, and because Heinz lost market share to competitors in frozen potatoes, meals and snacks in the United States.
But Heinz’s signature ketchup business attained record market share levels in the United States and Canada because of increased marketing, including the company’s advertising during last year’s National Football League Super Bowl, he said. Heinz did not run ads during this year’s Super Bowl.
The company cut expenses by 19 percent last year. Selling, general and administrative expenses totaled $2.1 billion last year, down from $2.6 billion a year earlier.
It expects the layoffs, plant closures and other cost-cutting moves to produce annual savings of $250 million.
Alex Nixon is a Trib Total Media staff writer. Reach him at 412-320-7928 or firstname.lastname@example.org.