CHICAGO (Reuters) - U.S. food group H.J. Heinz Co. (HNZ.N: Quote, Profile, Research, Stock Buzz) said on Tuesday it expects the real "turning point" for its European business to come in 2008 as investment behind new innovations begins to drive faster growth.
The ketchup maker -- which also makes Heinz baked beans, soups and baby foods in Europe -- has completed a restructuring of its European operations, selling off non-core units and buying businesses to reinforce its leadership in ketchups and sauces.
"I think fiscal 2008 will be the real turning point in Europe when many of the investments behind our innovations start to pay off," Heinz Chairman and Chief Executive William Johnson said at the Reuters Food Summit in Chicago.
Europe accounts for around 35 percent of Heinz's business -- largely in Britain, the Netherlands and Italy -- and Johnson said that in the nine months to end-January 2007, underlying sales in its European business increased around 1 percent.
But it will be Heinz's fiscal year to April 2008 when the real benefits of the restructuring in Europe and investments will start to be seen in the group's results, Johnson added.
He added that its British business, its second-largest after the United States, had "turned the corner". Baked beans and ketchup had hit all-time record market shares and soups were "coming around", while its Italian baby food business was seeing double-digit percentage revenue growth.
The Pittsburgh-based company sold off its European John West canned seafood and Linda McCartney frozen vegetarian food businesses last year, that had been a drag on growth, in a move similar to a 2002 restructuring in the United States.
The move was intended to focus on core brands in ketchup and sauces, baby foods and meals and snacks, and this was reinforced when its 2005 acquisitions of HP Foods from Danone (DANO.PA: Quote, Profile, Research, Stock Buzz) was cleared by regulators in March 2006.
The 470 million pound HP acquisition added the iconic HP and Lea and Perrins sauce brands together with Amoy in Europe to strengthen Heinz's ketchup and sauce business.
Last week, the group reported a better-than-expected rise in third-quarter earnings helped by new products and improvement at its international business.
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