Del Monte group posts profit

Campos-led Del Monte Pacific Ltd. (DMPL) posted a modest profit in the quarter ending October, reversing the loss in the previous quarter but still weighed down by the expenses incurred for its recent big acquisition in the United States.

In August to October, the second quarter in its fiscal year, DMPL posted a group net income of $200,000, a reversal of the $21.9-million net loss in the first quarter.

The group earlier aligned its financial year with that of newly acquired Del Monte Foods Inc. (DMFI) in the US which is May to April.

For the six months that ended in October, the group incurred a net loss of $21.7 million due mainly to non-recurring acquisition-related expenses in the first quarter. The group earlier embarked on a leveraged buyout of the consumer food business of DMFI.

In the second quarter, the group posted $548 million in sales, of which the DMFI contributed $435.1 million.

“We are committed to significantly deleverage DMPL’s balance sheet by reducing debt in the next quarter through an international perpetual preference share offering followed by a rights issue which are expected to raise $515 million,” DMPL chief executive director and managing director Joselito Campos Jr. said in a statement.

In the second quarter, cash flow as measured by earnings before interest, taxes, depreciation and amortization (Ebitda) hit $59.4 million while net income before acquisition-related and other non-recurring expenses reached $20.7 million. The Ebitda level for the quarter was more than double that of the first quarter given the seasonality of the business.

“In the US market, the initiatives taken after acquisition—which include reverting to competitive pricing levels, reintroducing well recognized classic Del Monte label and reinstating trade support levels—have led to increased market share across our key categories of packaged vegetable, fruit and tomato” said DMFI chief executive officer Nils Lommerin.

“Our main drawback was the impact of currency deterioration in Venezuela that contributed to the overall decline of 6 percent in our sales versus the prior year,” he added.

DMPL’s branded business in Asia—Del Monte in the Philippines and the Indian subcontinent, as well as S&W in Asia and the Middle East—and export sales posted sales of $128.5 million and net profit before acquisition-related interest expenses and non-recurring expenses of $10.7 million. Comparative figures in the previous quarter were $120.6 million and $6.4 million, respectively.

In the first half, the group posted sales of $993.6 million, with DMFI contributing $774.6 million.