Food conglomerate Del Monte Pacific Ltd. (DMPL) booked a lower net loss of $12 million from May to July—the first quarter of its current fiscal year ending in April 2016.
The company was able to cut its first quarter loss despite a weak US operations and the El Niño-induced dryspell that curbed its Philippine pineapple production.
For this quarter, DMPL posted a 6-percent year-on-year growth in sales to $472.8 million, resulting in the decline in the three-month net loss from $22 million a year ago, the company told the Philippine Stock Exchange Friday.
“We have successfully laid a solid foundation from which we will execute our growth plans in the coming quarters. Barring unforeseen circumstances, we look forward to a return to profitability in full-year 2016, ” DMPL managing director and CEO Joselito Campos Jr. said in a statement.
In early 2014, DMPL’s $1.675-billion acquisition of the consumer food business of American corporation Del Monte Foods (DMFI) allowed the group to break into the American market and reunite with its mother brand in the United States but also increased its debt stock and interest expenses.
The first quarter is usually the weakest period for the US operations. This and the expenses incurred in the implementation of SAP (which stands for systems, applications and products used as branding for a customer and business management software) were blamed for the first quarter loss.
“The El Niño weather pattern also caused reduced pineapple supply in the group’s plantation in the Philippines leading to lower exports,” the firm said.
With a 23,000-hectare pineapple plantation in the Philippines, 700,000-ton processing capacity and a port beside the cannery, DMPL’s subsidiary Del Monte Philippines Inc (DMPI) operates the world’s largest fully-integrated pineapple operation.
The US unit, DMFI, generated higher sales, gross margin and gross profit, but still posted a net loss due to the seasonality factor. However, DMPL said market shares across core retail segments had maintained their strength, noting that “DMFI further developed partnerships with key retailers through investments in effective marketing and innovation.”
US sales grew by 10 percent year-on-year while sales in the Philippines rose by 7 percent over the same period.