Del Monte shuts down US vegetable business

Del Monte Pacific Ltd.’s US subsidiary has divested its vegetable business because it was not doing well.

DMPL’s Del Monte Food Inc divested its Sager Creek vegetable business and consequently shut down the production facility in Siloam Springs, Arkansas.

DMFI also shut its Plymouth, Indiana tomato production facility to improve efficiency and streamline operations. This was meant to improve operational excellence.

On the other hand, the second largest subsidiary, Del Monte Philippines Inc. (DMPI), generated sales of $134 million, up two percent versus the same quarter last year. DMPI’s sales comprise Philippines sales and exports. Sales in the Philippines, the largest market of DMPI, were up in peso terms on better sales of packaged fruit as well as the food service channel.

DMPL achieved second quarter sales of $624.7 million for fiscal year 2018, down 1.8 percent from the previous year due to lower sales in the US which had been affected by unfavorable pricing in food service and increased planned trade promotion spending.

For the first half of FY 2018, the group generated sales of $1.1 billion, marginally lower than the year ago as higher sales in Asia were offset by lower sales in the US.

DMFI, which contributed $485.6 million or 78 percent of group sales, saw its sales decline 1.6 percent.

On the other hand, volume was marginally higher driven by the strong performance of the packaged vegetable and fruit segments ahead of the holiday season.

The group generated a net loss of $2.1 million due to the one-off expenses for DMFI’s plant closures.

Excluding these one-off expenses, the group would have generated a net income of $11.5 million during the period.

DMPL managing director and CEO Joselito Campos Jr said the company’s actions in the US were necessary.

“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,” he said.

The company has also invested in brand-building to support its heritage brands in the US.