Del Monte Q3 net profit down 14% to US$25.9m amid inflationary pressures

Singapore

CANNED food brand Del Monte Pacific on Wednesday (Mar 9) posted earnings of US$25.9 million for the third fiscal quarter ended January, down 14 per cent from net profit of US$30.2 million in the corresponding year-ago period.

This took the group's net profit for the 9-month period to US$80.1 million, up 64.2 per cent from earnings of US$48.8 million in the comparable period for the previous year.

"Cost headwinds in the third quarter were quite significant impacting margins and profits," said Del Monte Pacific's chief executive Joselito Campos Jr. "While the road ahead has many challenges, we remain relentless in our revenue-enhancement and razor-focused on cost-saving initiatives."

Revenue for the quarter was up 4.9 per cent to US$659.4 million, which the group attributed to higher sales in the United States across almost all major categories, as well as higher exports of S&W branded premium fresh pineapples.

However, Del Monte's cost of sales for the quarter was up 8 per cent to US$496.2 million, which resulted in gross profit falling 3.4 per cent to US$163.2 million.

Del Monte's US subsidiary, Del Monte Foods Inc (DMFI), accounted for 71 per cent of the group's sales in Q3. DMFI's sales rose 6.5 per cent to US$468.4 million on the back of higher sales from branded retail primarily core canned vegetable and fruit, which more than offset the planned reduction in private label sales.

Sales from DMFI's foodservice channel also grew significantly as the business continued to recover alongside strong fruit sales in support of re-opening of schools and restaurants. New products launched in the past 3 years also contributed 5.8 per cent to DMFI's total sales in the Q3, said the firm.

Similar to its peers, DMFI was hit by cost inflation for the likes of raw produce, metal packaging and transportation, which led to lower margins that offset higher margins in the rest of the group.

Over in the Philippines, sales rose 4.2 per cent in peso terms despite a higher base a year ago driven by the pandemic. Growth was seen across nearly all categories despite continued lockdowns and lower foot traffic due to the pandemic, said Del Monte. In US dollar terms, total sales for this unit inched down by 0.7 per cent to US$117.3 million due to a weaker peso.

New products launched in the past 3 years contributed 4.7 per cent to total sales in the Philippines, said the group.

Sales of Del Monte's S&W branded business was up by 11.2 per cent due chiefly to higher sales of fresh pineapples in North Asia and Singapore. S&W pineapples sold in China also benefited from expanded distribution coverage in tier 2 and 3 cities by the company's distributors.

However, Del Monte's stake in the FieldFresh joint venture in India suffered a US$0.5 million loss in Q3 as growth in processed business was offset by the decline in fresh sales.

Shares of Del Monte closed at S$0.40 on Thursday, up 1.3 per cent or S$0.005.