Del Monte Pacific reports lower Q3 profit

MANILA, Philippines - Del Monte Pacific Ltd. (DMPL) controlled by the Campos family, posted lower profits in the third quarter, weighed down by transaction fees from its recent acquisition.

However, core income, which exclude non-recurring items, is expected to improve for the year on strong sales locally and abroad, the company said in a disclosure to the stock exchange.

“After incurring one-off transaction fees of $1.7 million for the proposed acquisition of Del Monte Foods’ consumer food business in the US, net profit was down 13 percent to $7.2 million,” DMPL said.

Early this month, DMPL announced its acquisition of the consumer food business of US-based DMF for $1.675 billion.

“The group expects that the transaction fees would be approximately $6 million for the year, which would impact net earnings,” DMPL said. However, the firm said the base operating income is expected to grow this year.

In the third quarter, core income rose seven percent to $8.9 million. Revenues climbed 8.9 percent to $126.96 million from $116.59 million a year ago “due to the strong performance of the non-branded business and the S&W segment, both processed and fresh,” DMPL said.

Specifically, sales in the Philippines picked up four percent in peso terms due to improved supply availability for the resurgent juice business.

DMPL said the new juice line capacity fully served the consumer demand for 100 percent pineapple juice and mixed juice drinks.

For its part, the S&W branded processed segment’s sales surged 47 percent on strong demand in China, Korea, Middle East and Indonesia while S&W branded fresh business jumped 31 percent due to robust sales in Korea, Japan and China.

“The non-branded business generated sales of $44.8 million, 19 percent higher year-on-year, on improved sales of processed pineapple and tropical mixed fruit products,” DMPL said.

The group’s non-branded business consists of industrial and private label sales, including sales to non-affiliated Del Monte companies under long-term supply deals.

The latest figures allowed DMPL to post $17.8 million in profits in the nine months to September, down five percent from a year ago due to the non-recurring expenses like the transaction fees and dual listing in the Philippine Stock Exchange in June.

“Adding these back, net profit for nine months would have been $20.7 million, or up 11 percent,” DMPL said, adding that sales gained 12 percent to $335.4 million from $300.2 million due to higher volume and better sales mix.

“Barring unforeseen circumstances, the group expects to improve base earnings in 2013 driven by both branded and non-branded business with higher revenue from better volume and sales mix in the Philippines, S&W markets and export markets,” DMPL said.

DMPL said it will continue pursuing the sale of higher margin, value-added products as it implements operational efficiencies, procurement savings and active cost management.

DMPL’s 23,000-hectare plantation in Mindanao is the world’s largest fully integrated pineapple operation with a 750,000-metric ton processing capacity. It was set up in 1926 by the US government because of the widespread pineapple disease in Hawaii.

DMPL produces, markets and distributes food, beverages, and related products in the Asia-Pacific region and the Indian subcontinent, and has supply deals with DMPL trademark owners and licensees around the world.

DMPL’s principal shareholder, NutriAsia, leads the Philippine market for condiments (Datu Puti and UFC), specialty sauces (Jufran and MangTomas) and cooking oil (Golden Fiesta).