DEL Monte Pacific has reported earnings of US$35.8 million for the second quarter to October, 63.8 per cent higher year on year, as its United States unit more than doubled profits.

 

Revenue rose by 4.4 per cent to US$651 million, showed the regulatory filing it made to the Singapore Exchange, where the Philippines food and beverage manufacturer has a listing.

 

It improved gross profit margin by 180 basis points to 27.4 per cent, mainly from a better sales mix with increased sales of higher-margin retail branded products in the US.

 

Its US unit contributed US$477.5 million or 73 per cent of group turnover, with sales rising 7 per cent on strong branded retail sales and planned reduction in sales of low-margin private label. Net profit saw a 151 per cent jump to US$22.7 million.

 

Del Monte Pacific cut its gearing during the quarter. Net debt to Ebitda (earnings before interest, tax, depreciation and amortisation) improved to 4.3 times from 5.8 times last year and gearing to 2.3 times from 2.6 times equity.

 

Earnings per share for the quarter stood at US$0.0159, up from US$0.0087 a year ago.

 

Del Monte Pacific' s sales for the half-year of financial year 2022 were up 7 per cent at US$1.1 billion, and net profit almost tripled to US$54.1 million, on higher US and international sales as well as a higher gross profit margin of 28 per cent.

 

Barring unforeseen circumstances, the group expects to generate higher net profit for FY2022 as it expects to offset the impact of higher commodity and transportation costs by maximising operational efficiencies and increasing higher-margin branded sales.

 

It also stated it will enhance and expand its offering of products and make these more readily available to consumers through traditional and digital channels, and through more convenient packaging formats.

 

" In the international market, the group is positioned to unlock market opportunities in China and further penetrate underserved markets," it added in the filing.

 

 

In a call to discuss the company' s latest financial results, Parag Sachdeva, Chief Financial Officer of Del Monte' s subsidiary Del Monte Philippines Inc (DMPI), said the company is considering an initial public offering (IPO) of its 93.6 per centowned US subsidiary Del Monte Foods Inc (DMFI) as one option to improve its capital structure and business performance.
 

The IPO could take anywhere from 18 to 24 months to materialise, but things could be subject to change depending on factors such as external market conditions, he warned.
 

The canned food brand plans to delay IPO of its 87%-owned Philippine subsidiary on Covid surge

 

CANNED food brand Del Monte Pacific Limited is actively looking for ways to " protect margins" and expand its product offerings that will allow the company to capitalise on market opportunities and changing consumer trends, said company executives on Friday.

 

In a call to discuss the company' s latest financial results, Parag Sachdeva, chief financial officer of Del Monte' s subsidiary Del Monte Philippines Inc (DMPI), said the company is considering an initial public offering (IPO) of its 93.6 per cent-owned US subsidiary Del Monte Foods Inc (DMFI) as one option to improve its capital structure and business performance.

 

The IPO could take anywhere from 18 to 24 months to materialise, but things could be subject to change depending on factors such as external market conditions, he warned.

 

This plan comes shortly after the group announced its decision to delay plans for the IPO of its 87 per cent-owned Philippine subsidiary DMPI on the Philippine Stock Exchange due to the recent surge in Covid-19 cases.

 

Mr Sachdeva said Del Monte and its bankers are " continuously watching and reviewing the market" and will be looking at getting the IPO done in the " short to mid term" .

 

The IPOs could help ease Del Monte' s high levels of debt, which were of particular concern to analysts as this could make the company vulnerable to macroeconomic shocks.

 

For the first quarter of FY2022 ended July, Del Monte had lowered its net debt to earnings before interest, taxes, depreciation, and amortisation (Ebitda) to 3.8 times from 5.4 times in the year-ago period, and reduced its gearing to net equity to 2.06 times from 2.19 times.

 

This is still quite far from the company' s goals of below 3 times for net debt to Ebitda, and 1-1.2 times for debt to equity.

 

Mr Sachdeva said the group is committed to reducing its financing costs. Ensuring that the group' s leverage continues to go down is also a " strong focus" , he added.

 

Del Monte on Thursday reported net profit of US$18.3 million for the first quarter of FY2022, reversing from a loss of US$3.2 million for the corresponding year-ago period.

 

Revenue was up 11.9 per cent year on year to US$462.1 million, which the group attributed to 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.

 

Segmentally, DMFI delivered a net profit of US$4.8 million, turning around from a loss of US$14.3 million in the year-ago period, while DMPI' s net profit rose 37 per cent to US$25.6 million.

 

Barring any unforeseen circumstances, Del Monte is expecting to generate a higher net profit in FY2022 ending April next year.

 

Gregory Longstreet, chief executive of DMFI, is expecting the upcoming holiday season in the US to have a positive impact on revenue. Del Monte' s largest US customers - Walmart, Costco and Kroger - have already told the company to anticipate higher demand for its products.

 

" We' re seeing early orders and signs that it' s going to be a very successful holiday," he said.

 

While Mr Longstreet said Del Monte' s margins are likely to be improved each year as the group focuses more resources on branded growth, the group is also susceptible to cost pressures such as rising tin prices, container costs and shipment delays which could hit margins adversely.

 

Mr Sachdeva said Del Monte is expecting the impact of inflation for the current financial year to be around 3-4 per cent of sales on an incurred basis. The group has however taken measures on the revenue and cost side to mitigate and offset the inflationary impact.

 

For instance, in the US, DMFI has pencilled in cost efficiencies of US$15 million as well as revenue-generating initiatives in the range of US$15-20 million for FY2022, which will " completely offset" the impact of inflation.

 

Over in the Philippines, the group is also able to take on such inflationary pressures because of its strong branding and dominant market share in North Asian markets, said Mr Sachdeva.

 

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.