Campos-led Del Monte Pacific Ltd. (DMPL) said its net loss in its fiscal first quarter ending July 31 narrowed to $13.1 million, from the previous year’s $30.5 million.
The global branded food and beverage company said, however, that its revenues rose during the period.
“Our margins were under pressure with inflation while interest rates rose, affecting the group’s bottom line,” Joselito D. Campos Jr., DMPL’s managing director and CEO, said.
“We are determined to bring margins up in the second half of our fiscal year through a combination of price adjustment and cost reduction, including minimizing waste further by continuously improving processes, and leveraging technology to enhance efficiency and lower expenses. Reducing leverage and interest expense is a key imperative and we are exploring all options to strengthen our capital structure.”
Last year’s net loss had included its US unit Del Monte Foods Inc.’s one-off refinancing cost of $71.9 million gross or $50.2 million net of tax and non-controlling interest.
DMPL generated sales of $516.7 million during the quarter, up 13 percent from the previous year with better sales in the United States and more fresh pineapple exports. The Philippines sales were higher in peso terms but flat in US dollar terms with the strengthening of the latter.
Del Monte Foods Inc. (DMFI) had sales of $356.4 million or 69 percent of the group’s turnover, and 18 percent higher than last year, driven by pricing actions and strong growth and development of the company’s branded product portfolio in both traditional and emerging channels.
The Philippine market, meanwhile, delivered sales of $75.9 million, 5 percent higher in peso terms but flat in US dollar terms due to the peso depreciation.
Sales of packaged fruit, beverage and culinary were higher, supported by communication campaigns and value-for-money offers amid the inflationary environment.
The company said its gross profit declined by 18 percent to $108.3 million with a gross margin of 21 percent. Declines were driven by inflationary factors which had increased the group’s product costs.
Del Monte Foods implemented a price increase on July 31 and carried out a number of cost savings initiatives to restore margins, whose impact will be felt in subsequent quarters.
“The price increase implemented in the US on July 31 will also allow DMFI to offset inflation and improve gross margins in the second to fourth quarters of fiscal year 2024,” it said.
“The global environment remains unstable and the group remains vigilant in managing its operating expenses which include packaging materials optimization; power and fuel initiatives; investments to improve efficiency, productivity and minimize wastage, and product bundling initiatives in distribution centers,” the company said.
“New market development initiatives in Mexico, South America and Canada driven by resources dedicated to expanding distribution of Del Monte branded portfolio in those markets including Kitchen Basics are expected to contribute to sales growth.”
Meanwhile, Jeanette Beatrice Naughton, daughter of DMPL’s chief executive, has been elected as director of Del Monte Philippines Inc.
Naughton is vice president, strategic planning of Del Monte Foods. She was responsible for spearheading the US unit’s strategic planning function and diversity, equity and inclusion initiatives, with principal involvement in the company’s mid-to-long term corporate vision, financial goals and key measures, business strategies and resources requirements.
“Naughton formerly held management positions at Google at their Mountain View, California headquarters. She has an MBA from the Sloan School of Management of the Massachusetts Institute of Technology and a BA Mathematics degree from Wellesley College,” the company said.