Heinz warns of lower-than-expected profits

Heinz has cut its forecast for second-quarter earnings per share.

It now expects to make 59 or 60 cents a share, down from an earlier estimate of 64 to 66 cents.

Heinz also says it's revising its full-year outlook, and warns that it expects third-quarter results to be slightly less than the second quarter - but with a stronger fourth quarter.

The company says there has been a significant slowdown in its foodservice business as a result of the economic downturn and the US terror attacks, as well as higher-than-expected supply chain costs in Australia, New Zealand and Japan.

Nevertheless, second-quarter sales are expected to rise by 10% as a result of acquisitions and several new product innovations.

Second-quarter operating profits at Heinz foodservice are now anticipated to be between $25m and $30m less than a year ago.

Sales in Japan have been significantly affected by the deteriorating economy and high supply chain costs from the company's production base in New Zealand, although businesses in Indonesia, Philippines and China are said to be showing good growth.

Heinz states: "The recent slowdown in the US economy has caused, for the first time in 10 years, a decline in restaurant meal purchases, the most important market indicator for the food service business.

"Since September 11, there has been further deterioration in dining out, particularly at travel-related venues such as airports, resort destinations, hotels and theme parks."

Heinz says its European operations are on track in the second quarter as a result of strong performance in its seafood and northern European businesses.