Del Monte back in the black on increased product demand
Campos family-led food and beverage conglomerate Del Monte Pacific Ltd. (DMPL) returned to profitability in the quarter ending October as the COVID-19 pandemic boosted demand for shelf-stable products among Asian and American consumers.
DMPL posted an attributable net profit of $21.9 million from August to October—the second quarter in its fiscal year 2021—reversing the loss of $37.35 million in the same period last year.
Stripping out one-off items, DMPL’s net profit went up by 37 percent year-on-year to $21.85 million in the quarter on the back of higher sales, favorable sales mix and overall margin improvement in both US and Asian operations.
The US unit, Del Monte Foods Inc. (DMFI), generated a net profit of $9.1 million, a turnaround from quarters of losses in the past.
The plant closures last year, which were implemented as part of the company’s asset-light strategy, helped to deliver incremental savings of $10 million in the second quarter.
For the six-month period, DMPL’s net profit stood at $18.6 million, reversing a net loss of $75.6 million in the same period last year.
The group generated six-month sales of $1 billion, better by 11 percent versus prior year, with DMFI delivering a 12-percent increase in sales to $714.9 million, accounting for 69 percent of group sales. DMFI supplied shelf-stable products for meal kit distribution to government food-relief organizations across the United States. As this program is expected to continue as the pandemic spreads and people remain out of work, DMFI expects to generate additional sales from this program in the coming quarters.
For the second quarter alone, DMPL’s group-wide sales grew by 12 percent year-on-year to $623.45 million. US sales expanded by 13 percent while Philippines sales increased by 10 percent versus their previous year’s levels.
“The strength of our brands and our products sought by consumers in the US and the Philippines, and improving sales in other Asian markets were at the center of the robust performance for the quarter. In addition, we are seeing the benefits from considerable cost savings achieved through the adoption of an asset-light model in the US along with greatly improving efficiencies which we have woven into our supply chain,” DMPL managing director and chief executive officer Joselito Campos Jr. said.
“We are razor-focused on managing costs while our solid fundamentals as a staple food business with trusted brands, and high quality, healthy and shelf-stable products will continue to drive our growth,” he added.
This fiscal year, DMFI is seen well-placed to improve performance in the United States.
—DORIS DUMLAO-ABADILLA
