Del Monte incurs $3.2-M loss on higher financial expenses

Campos-led fruit canner del monte pacific ltd. said it incurred a $3.2-million loss in its fiscal first quarter for 2021 ending July, from last year’s recurring income of $4.2 million mainly on higher financial expenses.

Sales for the period reached $413.1 million, higher by 10 percent from last year’s $375.9 million mainly driven by increased US and Philippines sales.

Given the seasonality of the business, the first quarter is historically the lowest quarter of the group, the company said.

The US subsidiary, Del Monte Foods Inc. generated $268.2 million or 65 percent of group sales. Its sales rose 11 percent from last year mainly driven by improved volume across almost all categories from the pandemic, partly offset by supply challenges on core vegetables and fruits.

The principal categories experienced

strong growth as consumer behavior shifted to healthy, shelfstable products in response to covid-19, the company said.

Revenues of Del Monte Philippines, meanwhile, grew 22 percent in peso terms and 18 percent in dollar terms to $18.7 million, driven by higher volume, favorable sales mix and buoyed by favorable peso-dollar exchange rate.

Faster growth was seen across all categories, especially behind flagship Del Monte brands of Spaghetti Sauce, Quick ‘n Easy Meal Mixes and Pineapple Juice.

“The relevance of these iconic Del Monte brands became magnified in a pandemic environment where consumers turned to healthy food and cooked more meals at home with the company’s culinary products,” it said.

“Our strategy is to strengthen the core business, expand the product portfolio, in line with market trends for health and wellness, and grow our branded business while reducing non-strategic business segments,” the company said.

The company said it will return to profitability during its fiscal year 2021, which ends in April.

Sales of the S&W branded business declined by 19 percent in the first quarter as higher sales of packaged products, such as canned pineapples, mixed fruits, beans and corn were offset by lower sales of fresh pineapples in China.

Fresh pineapples sold through the foodservice channel such as restaurants, hotels and airlines, were impacted though there had been some improvements at the end of the first quarter.

“The group expects its ‘Fresh’ business to grow in the remainder of the year,” it said.

Meanwhile, the company’s share in the Fieldfresh joint venture in India incurred a $0.7-million loss, higher than prior year quarter share in losses of $0.2 million, due to lower sales from branded packaged products. The pandemic significantly impacted the food service category which accounted for half of total sales in India. However, retail and e-commerce sales continued to surge, the company said.

Its net debt fell to $1.2 billion from $1.6 billion last year and gearing ratio improved to 2.2 times from 2.8 times of equity last year.

“We are encouraged by the sustained sales momentum in the first quarter which is a testament to the strength of our brands and product portfolio, offering health and nutrition to consumers. We recognize our own frontliners in the company who ensure a continuous supply of products,” Joselito D. Campos Jr., the company’s managing director and CEO, said.

Del Monte Philippines in August applied for regulatory approval of its maiden bond issuance of up to P5 billion, with an option to upsize to P7.5 billion. The proposed offering consists of three and five-year maturity tranches.

The proceeds of the offering will be used to refinance existing loans.