UPDATE 1-Heinz replaces head of North American unit

Tue Jun 26, 2012 1:51pm EDT

* Dave Woodward replaces Scott O'Hara

* O'Hara once seen as potential CEO

* Woodward last month named to head Latin America, Africa, Middle East unit

* Woodward ran Heinz UK and Ireland from 2006 until May

By Brad Dorfman

June 26 (Reuters) - H.J. Heinz Co has replaced the head of its North American business, which has been lagging the rest of the company in sales growth as price increases and cuts in promotions have hurt sales volume.

Scott O'Hara had been president and chief executive of Heinz's largest business segment for nearly three years and was once considered a candidate to run the entire company. He is leaving to pursue other opportunities, Heinz said on Tuesday, without giving further details.

Replacing him immediately is Dave Woodward, 47, who was put in charge just last month of the business unit that includes Latin America, Africa and the Middle East. He had been president of the company's UK & Ireland business since 2006.

Shares of Heinz, which makes its namesake ketchup, Ore-Ida frozen potatoes and other packaged foods, were down 10 cents at $53.13.

The North American business, including both consumer products and food service, accounted for roughly 40 percent of the company's $11.65 billion in sales in the fiscal year ended April 29.

Organic sales, which measures sales volume plus price changes, rose only 0.5 percent in the North American consumer business last year, while organic sales rose 3.5 percent for the company as a whole.

Price increases hurt volume, which fell 2.3 percent for the consumer unit but only 0.3 percent for the company as a whole.

"We expect more of a focus on the top line from here," J.P. Morgan analyst Ken Goldman said in an research note. He said that after recent conversations with management, he thinks that Heinz Chief Executive William Johnson was disappointed that the focus in the segment was more on short-term profits than increasing sales.

O'Hara and David Moran, the former head of North America who now runs Heinz's European business, had previously been seen as leading internal candidates to replace Johnson, 63.

"Last month, we would have said that Mr. Moran had taken the lead in this race, but now we think Mr. Woodward is in the running, too," Goldman said.

A Heinz spokesman said Johnson and the board have had an ongoing succession process for years.

"Bill and the board are firmly committed to Bill leading Heinz for years to come as the company continues to drive growth and shareholder value," the spokesman, Michael Mullen, said.

Heinz said it expects to name a new head of its business outside North America shortly.