DEL MONTE Pacific Ltd. (DMPL) trimmed its net loss in the past quarter on the back of higher sales, turning the listed company bullish about generating profit in the second half of its fiscal year that started in May.
In a stock exchange disclosure on Thursday, DMPL said it incurred a net loss of $13.1 million in its first quarter that ended in July, an improvement from the $30.5-million net loss a year ago.
“Last year’s net loss had included (US-subsidiary) Del Monte Foods Inc.’s (DMFI) one-off refinancing cost of $71.9 million gross or $50.2 million net of tax and non-controlling interest,” DMPL said.
DMPL’s sales rose 13% to $516.7 million during the period from $456.6 million previously on the back of higher sales in the US and of fresh pineapple, which increased 18% and 23%, respectively.
The company’s US unit, DMFI, generated sales of $356.4 million during the period, accounting for 69% of group turnover. It saw improved market share positions across the packaged vegetables, fruits, tomatoes, and fruit cup snacks segments.
“DMFI’s volume grew by 5% while sales improved by 18% driven by pricing actions and strong growth and development of the company’s branded product portfolio in both traditional and emerging channels,” the company said.
On the other hand, the Philippine market posted $75.9 million in sales, up 5% in peso terms but flat in dollar terms due to currency depreciation.
The Philippine market saw improvements across its five core categories of packaged pineapple, mixed fruit, beverage, tomato, and spaghetti sauces. Food service and convenience store channels also saw higher sales, up 25% and 16%, respectively.
“Sales of packaged fruit, beverage and culinary were higher, supported by compelling communication campaigns including Saucy Weekends campaign promoting tomato sauce, and value-for-money offers amidst the inflationary environment,” the company said.
For its international markets, the company said its fresh sales also rose 23% following higher sales of S&W Deluxe fresh pineapples and better pricing.
DMPL Managing Director and Chief Executive Officer Joselito D. Campos, Jr. said the company’s margins were “under pressure with inflation while interest rates rose” which affected the overall bottom line.
“We are determined to bring margins up in the second half of our fiscal year through a combination of price adjustment and cost reduction, including minimizing waste further by continuously improving processes, and leveraging technology to enhance efficiency and lower expenses,” Mr. Campos said.
“Reducing leverage and interest expense is a key imperative and we are exploring all options to strengthen our capital structure,” he added.
Meanwhile, DMPL said it expects higher net profit in fiscal year 2024, particularly in the second half, barring unforeseen circumstances.
The company added that it is planning to increase the production of its MD2 fresh pineapple to support higher exports.
“In the US, there will be increased penetration into channels such as club, e-commerce, dollar, convenience, natural and foodservice, while accelerating innovation and its contribution to spur sales growth. New market development initiatives in Mexico, South America, and Canada driven by resources dedicated to expanding distribution of DMFI’s branded portfolio in those markets including Kitchen Basics are expected to contribute to sales growth,” the company said.
“The price increase implemented in the US on July 31 will also allow DMFI to offset inflation and improve gross margins in the second to fourth quarters of fiscal year 2024,” it added.
On Thursday, shares of DMPL at the local bourse rose 16 centavos or 2.18% to finish at P7.50 apiece. — Revin Mikhael D. Ochave
