UPDATE 3-Heinz outlook could beat Street, shares rise

* EPS $0.60 vs Wall St $0.59 a share

* Sees FY11 EPS $3.06-$3.16 on constant currency basis

* Raises dividend

* Shares up 1.7 pct
(Rewrites with comments from analyst, company, stock activity,
byline; adds NEW YORK to dateline)

By Martinne Geller and Brad Dorfman

NEW YORK/CHICAGO, May 27 (BestGrowthStock) – H.J. Heinz Co (HNZ.N: )
said earnings this year could come in above Wall Street
estimates, as it speeds growth in emerging markets and invests
in new products, sending shares up 1.7 percent in premarket
trade.

But the company, which gets more than 60 percent of its
sales from outside the United States, also said on Thursday
that its earnings would be significantly affected by foreign
currency fluctuations.

Heinz has been spending money on new product development
and offering promotional discounts to U.S. retailers to try to
stave off competition from private-label brands and other
rivals that are also aggressively offering discounts.

Morningstar analyst Erin Swanson said the ketchup maker
ended fiscal 2010 on a solid note and that its 2011 forecast
was in line with her expectations.

“However, we expect Heinz will utilize promotional spending
over the next few months to propel volume growth, as consumers
still appear to be spending cautiously, given the elevated
levels of unemployment,” Swanson said.

With pressure in the U.S. market, Heinz has seen much of
its sales growth in emerging markets such as India, Russia and
Latin America.

Chief Executive Officer William Johnson said emerging
markets could account for 25 percent of sales by 2016, and 35
percent to 40 percent longer-term.

The company’s profit in the fourth quarter that ended April
28, was $192.4 million, or 60 cents a share, compared with
$175.1 million, or 55 cents, a year earlier.

Analysts on average forecast 59 cents, according to Thomson
Reuters I/B/E/S.

Sales rose 8.3 percent to $2.72 billion. analysts on
average forecast $2.75 billion, according to Thomson Reuters.

LOOKING AHEAD

The company forecast sales in 2011 would rise 3 percent to
4 percent. It said it expects prices to be flat to up 1
percent.

The company forecast 2011 earnings of $3.06 to $3.16 per
share on a constant currency basis. Analysts on average were
expecting $3.08 per share, according to Thomson Reuters
I/B/E/S.

The company said it does not expect significant share
repurchases this year, as it instead uses its free cash to
increase its dividend, pay down debt or for bolt-on
acquisitions.

Heinz shares rose 74 cents to $45 in premarket trade.

Stock Market

(Reporting by Martinne Geller in New York and Brad Dorfman in
Chicago; Editing by Derek Caney, Maureen Bavdek, Dave
Zimmerman)

UPDATE 3-Heinz outlook could beat Street, shares rise