Del Monte posts 13% growth

After three years of consecutive profit declines, Del Monte Pacific Ltd. (DMPL), jointly owned by food and beverage giant San Miguel Corp. and the Campos family’s NutriAsia Group, reported a 13-percent growth in net income as revenues reached an all-time high of $243.4 million.

In a statement released over the weekend, San Miguel said DMPL posted a net profit of $21 million last year on the back of strong sales volume.

For the second half alone, DMPL recorded a 66-percent growth mainly due to robust volumes, brand-building programs and cost saving initiatives under the new management. This effectively reversed the 31 percent decline in the firm’s earnings in the first six months of 2006.

DMPL was acquired by NutriAsia Pacific Ltd. early last year. NutriAsia is the joint venture company of the NutriAsia Group and San Miguel.

"We are pleased with the robust performance in the second half of 2006. The company is back on the growth track and the momentum is very encouraging going into 2007," said DMPL chairman Ramon S. Ang.

Growth in the second half was strongest in the Philippines, reflecting improvements in volume, the favorable impact of the peso appreciation, cost savings from transition initiatives, growth of processed fruits and a new focus on leveraging the company’s beverage segment – a growing category of which DMPL owns over 80 percent of the canned juice market.

New businesses led by Del Monte Pacific’s China-subsidiary Great Lakes and Del Monte Foods India also boosted DMPL’s bottomline, contributing a combined $14.3 million or six percent of the group’s revenues last year.

DMPL expects strong contribution to its future earnings from the impact of its ongoing cost efficiency program which to date has resulted in savings of $1.3 million. The program includes consolidation of tollpack operations, warehouse rationalization, improvements in production and trucking scheduling, and reduction in packaging and agricultural input costs.

Working together with new owners NutriAsia and San Miguel resulted in significant operational synergies. These include joint media purchase and DMPL’s provision of cattle fattening service to San Miguel using pineapple pulp for additional revenues.

DMPL managing director and chief executive officer Joselito D. Campos Jr., for his part, said:

"We are encouraged that initiatives we put in place are starting to bear fruit. This is just the beginning and there will be more business-building activities going forward."

Campos said DMPL is in talks with National Foods Ltd., a subsidiary of San Miguel, for it to supply to the Australian and New Zealand markets. Aside from this, he said the company is working closely with its Del Monte partners to come up with improved supply agreements."

Barring any unforeseen circumstances, DMPL expects to outperform last year’s financial results as it continues to focus on better operating execution, improving the product mix and widening opportunities to broaden availability and distribution of the company’s key brands.

Group performance will continue to improve as the full impact of volume-generating initiatives coupled with the cost-saving program will be realized starting this year.

DMPL owns the Del Monte brand in the Philippines, where it enjoys leading market shares for pineapple juice, juice drinks, pineapple solids, mixed fruits, tomato sauce, spaghetti sauce and tomato ketchup, and also markets products under its second-tier brand, Today’s.