H.J. Heinz Co.'s third-quarter net income rose 20 percent as revenue rose in the U.S. and emerging markets and the company raised prices to offset higher commodity costs.
The maker of ketchup and Ore-Ida French fries also said Thursday it plans to acquire an 80 percent stake in S.A. Industrias Alimenticias, a Brazilian maker of Quero brand tomato sauce and ketchup. Terms were not disclosed. The acquisition expected to double Heinz's sales in Latin America.
The Quero business has annual sales of $325 million and is Heinz' first major business in Brazil. The company has focused on emerging markets -- which now account for about 16 percent of its revenue and are a key growth area.
"This transaction is another significant step in our emerging markets strategy," said CEO William R. Johnson. "With Quero, Heinz will be well positioned in the key emerging markets of Brazil, Russia, India, and China as well as Indonesia."
Heinz's net income rose to $273.9 million, or 85 cents per share, from $228.5 million, or 72 cents per share. Analysts expected 83 cents per share, according to FactSet.
Revenue rose nearly 2 percent to $2.72 billion, matching analyst expectations. Revenue from emerging markets jumped 15 percent.
Overall volume edged up 0.5 percent, helped by acquiring Foodstar in China in November and raising prices 1.2 percent. Food makers benefited when people began to eat at home more during the recession, but now they are facing higher costs for ingredients and shipping.
North American Consumer Products revenue grew 3 percent to $839 million and volume rose 3.6 percent as the company sold more Heinz ketchup and gravy. Ore-Ida frozen potatoes, Smart Ones frozen entrees and Classico pasta sauces were strong.
One weak spot was Europe, where revenue fell 5 percent to $832 million, hurt by lower volume and weakness in Heinz soup in the U.K. and Germany, infant products in Italy, and several product categories in the Netherlands.
Heinz, based in Pittsburgh, reiterated its outlook announced last month of full-year net income of $3.04 to $3.10 per share. Analysts expect $2.26 per share.
The Industrias Alimenticias deal is expected to close in the next few months.