DUAL listed Del Monte Pacific Ltd. on Thursday said its income rose during its first fiscal quarter ending July, but it had a generally weak performance when its sales fell as a result of the weak performance of its US unit.
The company said its income rose more than four times to $3 million (about P160 million), from last year’s $0.7 million in profit. Sales fell 8 percent to $437.2 million, from last year’s $473.8 million.
The profit was due to the one-off gain from the purchase of US unit Del Monte Food Inc.’s (DMFI) loans at a discount in the secondary market. Excluding one-off items of $6.8 million after tax, the group would have incurred a net loss of $3.7 million versus a profit of $1.2 million last year due to lower sales in the US, specifically lower exports of processed pineapple.
Del Monte Foods contributed $308.3 million, or 71 percent of group sales. The rest came from other regions, including the Philippines.
Del Monte Foods’s sales declined by 8 percent due to lower volume across categories, most significantly branded tomato products and Private Label, as well as lower pricing in food service for pineapple-juice concentrate.
“The decline in sales was in line with DMFI’s strategy to deprioritize nonprofitable businesses including Private Label,” the company said.
It said, however, that it is introducing new food concept in the market including what it called fruit refreshers and fruit and oat products, while entering new product categories for food service with Riced Cauliflower and other vegetables.
Its share in canned vegetable and fruit and fruit cup snack categories increased during the quarter, driven by compelling innovations, strong execution against fundamentals at retail, and sustained marketing investment to support its brands, the company said.
The company divested its underperforming Sager Creek vegetable business also this year, booking additional one-off expenses of $8.4 million during its fiscal first quarter, which starts in May.
Sales in the Philippine domestic market were flat in peso terms and down 5 percent in US dollar terms due to the depreciation of the peso.
“Key accounts in food service and retail beverage and culinary continued to grow, offset by lower sales of packaged mixed fruits in retail due to excess trade inventory,” the company said.
The company recently postponed the listing of its Philippine unit, citing jittery market conditions.
Sales of the S&W business declined in the first quarter mainly due to lower sales in North Asia and Turkey. Increased competition from cheaper canned pineapple products from Thailand and Indonesia continued to impact S&W’s business, the company said.
Operations in Turkey were impacted by currency devaluation and political instability.
Del Monte’s Nice Fruit joint venture in frozen pineapple launched frozen pineapple spears in Japan in June. These were produced in Bukidnon, Philippines. Individually packaged and known as Pineapple Stick, it is available in about 70 percent of 7-Eleven outlets or about 14,000 stores in Japan.