Shares in HJ Heinz, which had risen on hopes that food industry consolidation would boost valuations, fell back yesterday as the group warned that the cost of introducing new products would hit second-quarter earnings.

The news focused attention again on the US food industry's slow sales growth and on Heinz's exposure to overseas earnings, which have suffered as a result of the dollar's strength against the euro.

First-quarter earnings per share were one cent above expectations at 68 cents before one-off items. However, Mr Paul Renne, chief financial officer, said the company expected the same figure for second-quarter earnings rather than the 70 cents consensus estimate.

The stock fell 5 per cent, or $1.81, to $35.25 by lunchtime.

Mr Bill Johnson, Heinz's chief executive, was one of the earliest and most vocal proponents of consolidation, but Heinz has stood on the sidelines as Unilever bought Bestfoods, Philip Morris bought Nabisco and General Mills merged with Pillsbury.

Mr Johnson said Heinz's improvement in gross margins, from 40 per cent to 42.2 per cent, was evidence that its strategy was working.