Relocation stings Heinz Wattie's

CLAIRE ROGERS
Last updated 05:00 21/11/2012

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Heinz Wattie's has reported a 5 per cent fall in net profit to $61.5 million, reflecting the costs of relocating sauce and beetroot production back to New Zealand.

Revenues for the year ended 29 April fell slightly - by under 1 per cent - to $729.7m.

Managing director Michael Gibson said Heinz Wattie's had made a "significant investment" to consolidate manufacturing operations during the year.

The company announced in mid-2011 it would relocate production of beetroot, some sauces - including its favourite Wattie's Tomato Sauce - and some canned products from Australia to Hastings in Hawke's Bay.

The move was projected to add 30,000 tonnes to the Hastings factory's output, an increase of between 10 and 15 per cent.

Gibson said in September it had spent well over $7.5m million upgrading its beetroot business since mid-2011. The Hastings beetroot line was expected to handle a crop projected to be 11,500 tonnes this year, four times the size of previous years.

The company's tomato crop is expected to reach 34,000 tonnes this season.

Heinz Wattie's has production facilities in Hastings, Christchurch and Auckland, and employs more than 1500 staff, although the number of workers fluctuates seasonally.

It exports more than 60 per cent of its locally-manufactured products, including tomato sauce, mainly to Australia.

Gibson said it had a long history of profitable operations in New Zealand and contributed significantly to the local economy. '

Heinz, with global sales of US$11.6 billion(NZ$14b) for the 2012 financial year, bought Wattie's 20 years ago for about US$300m.

Heinz Wattie's rival, McCain, which has also relocated production of some foods from Australia to New Zealand in recent years, boosted profit by 27 per cent to $11.4m for the year ending June, helped by stronger sales during the Rugby World Cup.

The company, which produces french fries for McDonald's as well as frozen potato products and vegetables and pre-prepared meals, increased revenue by 12.8 per cent year on year to $246.8m, according to Companies Office records from its parent company Australian-owned Weyville Holdings.

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- BusinessDay.co.nz

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