Del Monte swings back into the black in Q1

CANNED food brand Del Monte Pacific Limited posted a net profit of US$18.3 million for the first quarter ended July 31, reversing from a loss of US$3.2 million for the same period a year ago.

Revenue rose 11.9 per cent to US$462.1 million, driven by higher sales in the US across almost all major segments, higher exports of S&W fresh pineapples as well as processed pineapples and other products.

The group, which is dual listed on the Singapore Exchange and the Philippine Stock Exchange, improved its margins by 600 basis points to 28.9 per cent from better sales of higher-margin branded products in the US and lower costs.

Earnings per share was 0.69 US cents, compared with a loss per share of 0.42 US cents previously.

No dividends were declared for this quarter and the prior year quarter as the group does not declare dividends based on first quarter and third quarter results.

The group's US subsidiary, Del Monte Foods Inc (DMFI), generated sales of US$298.1 million or about 65 per cent of group sales. Improvement in supply and distribution gains led to higher volume across major categories, primarily canned vegetables and fruits. Its branded retail and food service sales grew by a combined 17 per cent which more than offset the decline in low-margin private label sales as planned, said Del Monte.

The group's second largest and most profitable subsidiary, Del Monte PhiIippines Inc (DMPI) recorded higher sales of US$176.0 million, up 20 per cent versus the from a year ago on higher international market sales. This boosted net profit by 37 per cent to US$25.6 million.

DMPI benefited from the reduced corporate tax rate of 25 per cent with the passage of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act) in March 2021. More than half of DMPI's sales are in the Philippines, with the balance in the international market.

The group said that the first quarter results are in line with earlier guidance that it expects to generate higher net profit for FY2022.

In its outlook, Del Monte said that it is proactively addressing inflationary impact from commodity headwinds and increased transportation costs through revenue and cost drivers including driving efficiencies and productivity across operations.

Barring unforeseen circumstances, the group expects to generate a higher net profit in FY2022.

Del Monte's shares closed at 36.5 Singapore cents on Thursday, up 1 Singapore cent or 2.82 per cent.