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H.J. Heinz Company (NYSE:HNZ), the makers of the popular Ketchup brand, reported a stronger than expected first quarter results due to improved margins, low overhead expenses and reduced effective tax rate. However,  currency movements did hamper its sales volume.

The packaged food producer recorded a first quarter net profit of $258 million or 87 cents, up 14 percent from $226.1 million or 70 cents, the same quarter last year. Analysts were expecting an EPS of 80 cents. However, the net sales during May-July quarter fell 1.5 percent Y-o-Y to $2.79 billion. Organic sales, which does not include acquisitions, currency fluctuations and divestitures, were up 4.8 percent.

The company has struggled in the North American and European markets because of the poor economic conditions. However,  demand in the emerging markets has been fantastic. The emerging markets including India, Indonesia, China and Brazil, contributed approximately 25 percent of the company’s total sales during the quarter. H.J. Heinz Company (NYSE:HNZ) has also increased prices of many products. The company is refining its strategy in the developed markets by offering entry-priced items. Gross margins were higher than most analysts’ forecast. Heinz  maintained FY13 currency-neutral guidance of 5-8% growth, which equates to $3.52-$3.62, and at least 4% organic sales growth.

Many analysts have commented on the stock after the quarterly results. UBS AG (NYSE:UBS) reiterates a “Buy” rating for the company, while Jefferies Group, Inc. (NYSE:JEF) has a “Hold” rating on Heinz. Credit Suisse Group AG (NYSE:CS) maintains its “Neutral” rating with a target price of $59. It has also raised the forecasts for FY13, FY14 and FY15 for the company. Credit Suisse Group AG (NYSE:CS) further states that the stronger than expected results of H.J. Heinz Company (NYSE:HNZ) will fuel the positive sentiments for other  food stocks. The food stocks are trading at a 16 percent discount in this difficult environment, due in part to the recent drought. At this time, the only downside for Heinz is that its operating income has only increased 10 percent since 2010, compared to 28 percent for the overall US packaged foods group.

H.J. Heinz Company (NYSE:HNZ) opened at $57.41 today and jumped immediately to $58.35, giving the company a market value of $18.39 billion. The 1-year high/low were $58.35/$48.54.