Del Monte posts strong Q2 results

MANILA, Philippines — Del Monte Pacific (DMPL) Group, the Singapore and Philippine listed food and beverage company, reported a stronger net income in the second quarter of its fiscal year ending October.

DMPL’s second quarter net income grew to $49.5 million, 38 percent higher than the $35.8 million a year ago.

DMPL’s managing director and CEO Joselito Campos Jr. said despite the challenging business environment, the company was able to post strong second quarter results.

“We are excited to share our buoyant second quarter results, a commendable feat in this inflationary environment. We remained agile in seizing opportunities to generate better sales and profit, including avenues to lower our financing cost and expenses,” he said.

For the second quarter, DMPL’s US subsidiary, Del Monte Foods Inc. achieved sales of $506.3 million or 72 percent of group turnover.

Sales increased by six percent on higher retail branded sales of canned vegetable, fruit, tomato and broth, coupled with incremental sales of $12.1 million contributed by newly acquired Kitchen Basics ready-to-use stock and broth business.

The Philippine market, meanwhile, likewise recovered during the review period, after declining in the first quarter.

Sales hit $107.9 million, up 22 percent in peso terms. All product categories delivered higher volume and sales especially packaged fruit, culinary and innovation.

“This performance was driven by the combined impact of market share improvements, advertising, improved distributor operations, superior holiday in-store merchandising and promotions, and low-cash outlay SKUs and discounted multipacks to help consumers cope with high inflation,” the company said in a report.

Food service resurgence toward pre-pandemic level continued, with sales up by 21 percent behind the accelerating business of quick service restaurants, DMPL also said.

For the international markets, composed of fresh produce and packaged goods, the group generated higher sales of $84.9 million, up 13 percent, driven primarily by the strong performance of fresh pineapple exports.

Fresh sales grew by 46 percent on the back of higher demand and consumer promotions in North Asia and Middle East, coupled with improved supply availability this quarter.

In the first half, DMPL’s sales grew by four percent to $1.2 billion on higher sales from the US and international markets.

However, first half net income plunged to $19 million from $54.1 million due to the one-off redemption cost of $50.2 million, which was booked in the first quarter as Del Monte Foods Inc., refinanced its loan with a long-term credit facility that has lower interest rates.

Without this one-off cost, net income would have been up by 31 percent to $70.8 million.

Campos said DMPL is confident about the company’s strong fundamentals.

“Our strong portfolio of branded health and wellness products, together with our entry into adjacent and new categories, will allow us to maintain our revenue and income growth over the years to come,” the company said.

In all, DMPL expects to generate a net profit in fiscal year 2023 after one-off redemption expenses incurred in the first quarter.