Forget the salmonella outbreak that had tomato growers seeing red when their fruit was thought to be the culprit. The jalapeno is now the prime suspect, of course, and perhaps appropriately, ketchup maker H.J. Heinz (NYSE: HNZ ) posted first-quarter 2009 results that were peppered with record sales and profits.
International markets helped ripen the results. Russians apparently want to mix ketchup with their vodka, since Russia is reportedly the second-largest market now for the red sauce. Packaging innovations have also helped the Motley Fool Income Investor recommendation achieve a record 84% share in Canada for ketchup.
Yet these results shouldn't surprise investors, who realized last quarter how important the international market was for Heinz. Foreign markets, which grew sales at least 20% in every region, make up more than half of its revenue and helped drive Heinz's consolidated sales up 14.9%.
Domestically, it was a bit of a mixed bag, particularly as food-service revenue dipped 2.8% on a greater than 4% volume decline. Although some investors are getting an appetite for restaurant stocks again, the declines in comps we've been seeing recently underscore the weakness Heinz reported. Moreover, Hormel Foods (NYSE: HRL ) said commodity costs at home hampered its bottom line, despite a 10% increase in revenue. Hit the "ditto" button for Dean Foods (NYSE: DF ) , Kraft Foods (NYSE: KFT ) , and General Mills (NYSE: GIS ) .
Heinz could soup things up quickly if the nice fit it sees in Campbell Soup (NYSE: CPB ) comes to fruition. CEO William Johnson said he'd like to acquire the soup maker because it's a well-run company, but there's been no announcement that a purchase is imminent.
The ketchup king has made a couple of acquisitions lately, though, and new product introductions have been fueling its growth. The products in the Weight Watchers line, for example, are among its top-selling products and represent $1 billion in revenue.
Heinz's top 15 brands account for 70% of sales and have enjoyed 12% compounded growth over the past two years. I find that the opportunities for growth both here and abroad -- along with the potential for an acquisition of Campbell's -- make the ketchup maker a still-tangy choice.
Last time around, I thought Heinz was attractive at $50, and although it's increased only slightly since then, my opinion hasn't changed.
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