Del Monte incurs loss due to US plant closures
Del Monte Pacific Limited reported a net loss of US$2.1 million for the first half of its fiscal year ending April 2018 versus the net income of US$12.9 million in the first half of the previous year due to one-off expenses for plant closures.
In a disclosure to the Philippine Stock Exchange, DMPL said that, excluding these one-off expenses, the Group would have generated a net income of US$11.5 million.
For the first half of fiscal year 2018, the Group generated sales of US$1.1 billion, marginally lower versus the prior year period as higher sales in Asia were offset by lower sales in the US.
It noted that sales in the US were affected by unfavorable pricing in foodservice and USDA, and higher planned trade promotion spending.
Sales of the S&W business, the fastest growing business of DMPI in Asia and the Middle East, delivered a strong double-digit growth in the first half, mainly driven by robust sales of fresh pineapple, new product launches in new packaging formats in North Asia, and expansion into Turkey, a new market for packaged products.
The Group’s US subsidiary, Del Monte Foods, Inc. (DMFI), divested its underperforming Sager Creek vegetable business as part of the Group’s strategy to improve operational excellence.
This involved shutting the production facility in Siloam Springs, Arkansas. DMFI also shut its Plymouth, Indiana tomato production facility to improve efficiency and streamline operations.
These resulted in one-off expenses amounting to US$23.6-million pre-tax or US$13.1-million post-tax in the second quarter.
“We have taken some challenging but necessary steps in the US to realign our manufacturing footprint and strengthen our competitiveness in the long-term, amidst shifts in consumer tastes and shopping preferences,” said DMPL Managing Director and CEO Joselito D. Campos Jr.
He added that, “we have also invested in brand-building to support our heritage brands in the United States and reinvigorate the categories we are in, while forging ahead with innovative products and entering new channels.”