Del Monte profit inches up to $4.5 M in Q1

MANILA, Philippines - Del Monte Pacific Ltd. of condiments king Joselito D. Campos Jr. barely grew its profits in the first quarter, weighed down by the non-branded business.

But the group said it expects improved earnings this year on the back of strong demand enjoyed by the branded business.

In a regulatory filing, the Singapore-listed Del Monte said earnings inched up two percent to $4.5 million in the first three months of the year.

Turnover jumped 17 percent to $87.4 million, driven by higher sales of the branded business in Asia, which is composed of Del Monte in the Philippines and the Indian subcontinent as well as S&W in Asia and the Middle East.

“Our branded consumer business continues to perform solidly in line with our vision to be one of the fastest growing global branded food and beverage companies,” said Campos, managing director and CEO of Del Monte.

“However, the non-branded business remains challenging due to the supply and demand imbalance in the pineapple export markets, especially Europe. We plan to shift our revenue mix over a period of time towards more branded sales to deliver higher margins and more sustainable profits,” Campos said.

Del Monte said its non-branded business was flat due to weak demand in export markets, particularly canned fruits, and lower pineapple concentrate prices.

Del Monte said it is benefiting from the robust Philippine economy, with sales of processed fruit, culinary and canned beverage surging 34 percent.

The S&W branded fresh business, for its part, picked up 20 percent, driven by robust sales in Japan, Middle East and Singapore, the company said.

Del Monte said it is making inroads into the Japanese wholesale and retail markets while it builds brand equity in key markets of Korea and China.

The group also recognized an equitized loss of $1.1 million for the Indian FieldFresh joint venture, down from the $1.7-million loss a year ago on higher sales, improved product mix and reduced costs.

Moving forward, Del Monte expects better earnings for the entire year.

“Barring unforeseen circumstances, the group expects to improve earnings in 2013 driven by the branded business with higher revenue from better volume and sales mix in the Philippines and S&W markets,” Del Monte said.

The company is also cutting back on tonnage to address the weak export markets and low pineapple concentrate juice prices.

“The group is expanding its branded business by deepening penetration in existing markets through improved trade coverage and advertising, entry into new markets, and shifting to higher-margin branded products,” Campos said.

In particular, Del Monte plans to shift the industrial pineapple concentrate business into branded ready-to-drink beverage by increasing production capacity in the second half.

Last month, Del Monte announced its plan to broaden its investor base by conducting a dual listing in the Singapore and Philippine stock markets, making it the first local firm to be listed in both the Singapore Stock Exchange and Philippine Stock Exchange.

The NutriAsia Group of Campos owns a majority stake in Del Monte. NutriAsia leads the Philippine market for condiments, specialty sauces and cooking oil.

The 23,000-hectare plantation of Del Monte in Mindanao is the world’s largest fully integrated pineapple operation with a 700,000-metric-ton processing capacity.