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H.J. Heinz CEO William Johnson on the impact of rising commodity prices and the company’s diversification.
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Food prices have been spiking to their highest level since 1990.
The price of one key.
One key item tomatoes soaring.
Nine point 7% year over year but this is not stopping our next -- from selling more than 650 million bottles of -- every year.
And today one key ingredient of catch -- that price -- falling joining us now on a Fox Business.
For Bill Johnson.
Chairman CEO and president of HJ -- he's been there about twenty years of bill on a day election this.
Where did you have some key ingredients prices that are falling for example -- -- and I'm -- with all of your food companies you've got many there.
These prices at least for soft commodities coming down.
What do you do -- a day like this are you telling your hedging department is that what you have where you say start start hedging on lower prices at least.
No we tell our operating people just keep an eye on the markets we don't try to evaluate what one day means -- another day we try to look at trends.
And try to capture those trends to our advantage and I think historically we've got a pretty good job this testament by our last five years results so.
I don't get terribly non plus by one day obviously it was not pleased with the jobs report nor of the ISM report but.
Nonetheless we continue to sell a lot of food products around the globe who we continue to be well diversified so I continue to look for good things from -- Well he you have the coroner off from her could have ketchup it's unbelievable I was talking to a totally different CEO not even in your industry.
And I said I'd be talking to you today and he said.
Very listen to restaurants in America or frankly across the world who doesn't have to have Heinz as a premium catch up.
Because people just wouldn't accept that they just wouldn't accept.
A lower quality or or sort of knock off catch up but I think I think that that's pretty amazing for you guys yet you're weighing more than just one single product needless to say.
But we do look at a -- the trend and the trend is that food prices have been skyrocketing and we look at that UN food price index it's a basket of different kinds of commodities and foods.
And it has certainly skyrocketed.
What is that going to do to your bottom line I can't imagine it's gonna help that very much of people are now skimping insane.
Well I think you know again our brand is so powerful an iconic on a global basis and we sell Marriott and a diversified basket of products so.
I think fundamentally -- price up were necessary to offset commodity costs we've got a lot of productivity initiatives under way and frankly we've.
Taken our bottom line guidance up.
From six to 9% long term the seven to 10% so we're pretty confident about the future I think for us.
The great thing is we're geographically diversified were product portfolio diversified we've got a lot of great brands around the globe.
And we couldn't be in better shape and I think that's a testament to what -- started an 1869.
And we continue through a 142 years later.
Well yeah and and needless to say that it's an iconic it's so it's it's a cliche to say -- -- is so iconic but.
Here are some your brands on the screen TGI Friday's you around you've got smart ones -- bagel bites my kids can't -- live without them but you know.
Put it in the toaster it's always burning somebody's mouth I mean -- but.
Then I have we can take -- shot yes we do have the tomatoes and you caused by more than two million tons of potatoes and tomatoes -- it every year you look at this I -- not know tomatoes.
Are priced annually fairly priced once a year.
That's correct they're they're priced in California -- year and up pretty much sets the global price.
Four tomatoes and we negotiate along with several other manufacturers with the California tomato growers association.
-- annualized basis and frankly to -- or below where they were for five years ago slightly higher than last year so.
For us it's been a benefit and we continue to leverage that benefit in terms of selling more catch -- -- more profit.
You've obviously expanded in a big way into emerging markets and among these emerging markets you at a Brazilian acquisition.
You've you've been very big in China India Indonesia but Russia as well.
Do Russians love catch -- I didn't realize that used a lot of catch -- Well we have an internal debate about whether Russia is the second or third largest -- market in the world but nonetheless it's among the fastest growing and our business and and -- is done extremely well the Russians -- -- The British left catch up the Americans love -- the Chinese love soy sauce and so we're well positioned there but fundamentally ketchup is a truly global live up.
And the high and brand travels well everywhere with the.
Bill but you know that households are scaling back -- watching their balance sheets if if the government isn't households are.
Do think that that the administration could be doing more to make things easier to create more jobs you yourself have shed several thousand I think about a thousand jobs over the past couple of months if not the year but what do we do to reverse that and get companies like you to hire what would it take for Heinz to start hiring in a meaningful way.
Well I think we need -- regulatory environment it's a little friendlier to business I think we need tax policies that are friendlier to business in the United States I mean right now.
US based companies are having a very difficult time competing -- -- international based company should charge lower taxes.
And as a consequence of that you see a lot of American companies becoming multi national companies and expanding and areas that are showing more rapid growth and frankly.
Trade us a little better and I think there has to be -- recognition of business and government needs to work together to improve employment it can't be one or the other alone.
And I think there's been a chasm there I don't think the two worked together well over the last say six or seven years and I think that needs change.
I hit -- it's great to see you it is purple ketchup still on the market I remember I was one of the original taste testers of -- of no fortunately -- it is not on the market anymore neither is blue catch up for green ketchup.
Well let us know when you've got something new in the pipeline will unveil it right here on Fox Business thank you -- good.
Thank you and Bill Johnson is chairman CEO and president of HJ Heinz company that came out with a very strong earnings this most recent quarter it stopped slightly down today but just about everything else is too.
Closing bell --
