Del Monte Q4 net profit rises 38% to US$20 million as US sales pick up

CANNED food brand Del Monte Pacific on Thursday (Jun 23) posted earnings of US$20 million for the fourth quarter ended April, up 37.8 per cent from earnings of US$14.5 million in the corresponding year-ago period. 

A key contributing factor to the improved bottomline figures was a 14.4 per cent year-on-year increase in sales to US$569.5 million from US$497.8 million, which the group attributed to strong sales growth across major segments in the United States, as well as higher exports of its S&W branded premium fresh pineapples. 

For FY2022, Del Monte’s earnings were up 58.1 per cent to US$100 million, from US$63.3 million in FY2021. Sales for the year were up 8.3 per cent to US$2.3 billion. 

Del Monte’s board has approved a final dividend of US$0.017 per share, which is about 42 per cent higher than the previous year’s dividend. The dividend is payable to shareholders on Jul 27, after the book closure date on Jul 13. 

On a per-share basis, earnings for Q4 rose to US$0.0082 from US$0.0049 in the year-ago period, while earnings for FY2022 stood at US$0.0417 versus US$0.0224 in FY2021. 

For Q4, Del Monte’s US subsidiary Del Monte Foods Inc’s (DMFI) sales rose 25.2 per cent to US$411 million, which accounted for 72 per cent of the group’s turnover. DMFI’s improvement in sales was driven by strong branded retail sales – particularly with canned vegetable and fruit volume rising 23 per cent on the back of increased product supply and merchandising support for the Easter holiday.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Del Monte’s canned vegetables, which had the highest contribution to branded retail sales, saw a 4-percentage point increase in market share on the back of strong commercial execution, increased distribution of core products, and new product expansion, all supported by superior supply chain service. Canned fruit, canned tomato and fruit cup snacks also achieved higher shares. 

DMPL ex-DMFI generated sales of US$175.8 million, down 7.2 per cent from US$189.3 million in the year-ago quarter. The lower sales were mainly due to lower volume from the Philippines, lower export of S&W packaged pineapple and other products. These were, however, partially offset by higher exports of S&W branded fresh pineapple to China and South Korea.

Over in the Philippines, inflationary pressures dragged sales down 7.3 per cent in Peso terms to US$68.3 million, mainly on lower sales of mixed fruit and spaghetti sauce with increased activity from competition. 

Packaged fruit and spaghetti sauce category consumption was also down due to shifting consumer priorities in the face of food inflation. 

Despite volume decline, Del Monte’s market share of packaged fruit increased owing to sustained marketing programmes. However, spaghetti sauce lost share from low-priced brands.

Sales of the S&W branded business in Asia grew on the back of strong sales of the premium fresh pineapple segment in China and South Korea. In China, sales benefited from expanded distribution coverage from existing distributors, as well as new distributors which have supported the continued expansion into tier 2 and 3 cities.

Del Monte’s share in the Del Monte Foods (previously named FieldFresh) joint venture in India booked a loss of US$1.5 million during the quarter, which included one-off costs related to the closure of the low-margin fresh business. No loss was recorded in the corresponding quarter last year. 

Del Monte Pacific’s chief executive Joselito Campos Jr said: “Our growth in FY2022 was no small feat amid the ongoing pressures of a pandemic and high inflation across the world. 

“Through our trusted portfolio of quality products, strategic pricing actions and increasing efficiencies across our business, our team successfully navigated these unprecedented challenges and demonstrated our resilience.”

Amid a high-cost environment, Del Monte said it remains vigilant in managing its costs. DMFI, for instance, has embarked on a number of cost optimisation initiatives, including distribution centre consolidation and increased use of rail instead of trucks to save on fuel cost.

Barring unforeseen circumstances, Del Monte said it expects to generate higher net profit, before one-off refinancing expenses, in FY2023.

Shares of Del Monte closed flat at S$0.355 on Thursday.