Dual-listed Del Monte D03 has reported earnings of US$9.8 million ($13.3 million) for the 3QFY2023 ended Jan 31, 62.0% lower y-o-y. The lower earnings was due to lower gross profit and higher interest expenses logged during the quarter.
This brings the group’s 9MFY2023 earnings to US$28.9 million, 64.0% lower y-o-y. This was due to one-off costs of US$53.9 million where US$50.7 million was booked in the 1QFY2023 as the group’s US subsidiary, Del Monte Foods (DMFI) refinanced with a long-term credit facility that has lower interest rates.
Without the one-off costs, Del Monte’s earnings would have been 3% higher y-o-y to US$82.7 million.
3QFY2023 turnover increased by 3.3% y-o-y to US$681.2 million due to higher sales from the US and around the rest of the group’s markets. Sales in the Philippines were higher in peso terms but lower in US dollar (USD) terms.
Gross profit, however, fell by 6.7% y-o-y to US$152.2 million due to higher raw material, packaging, manufacturing and logistics costs. The lower gross profit was also attributable to an unfavourable sales mix during the quarter. Excluding DMFI, the group’s gross profit took a bigger hit due to the higher costs of tomato paste and tinfoil, as well as higher transportation costs.
Gross profit margin (GPM) for the quarter fell by 2.4 percentage points y-o-y to 22.3%.
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9MFY2023 turnover grew by 3.6% y-o-y to US$1.84 billion as all segments – except packaged fruit – increased y-o-y.
Gross profit for the period increased by 3.0% y-o-y to US$489.2 million as all segments – except packaged fruit and others – grew on a y-o-y basis.
GPM for the 9MFY2023 fell by 0.2 percentage points y-o-y to 26.6%.
Earnings per share (EPS) for the 3QFY2023 and 9MFY2023 stood at 0.46 US cents and 1.28 US cents on a fully diluted basis.
As at Jan 31, cash and cash equivalents stood at US$13.9 million.
“Notwithstanding inflationary pressures, our largest business, Del Monte Foods in [the] US, delivered growth in sales and operating profit as it remained focused on building its brands and expanding its distribution footprint. We will continue to leverage the growth of [the] international market led by [the group’s heritage brand] S&W while maximizing fresh sales in China with the environment normalizing,” says Joselito Campos, Jr., managing director of the group.
“In the Philippine market, we will further accelerate volume and pursue our cost reduction and productivity efforts in the face of peso depreciation,” he adds.
In its outlook statement, the group says it will “remain vigilant” in managing its operating expenses amid the uncertain global environment, which brings about cost pressures and consumers being more cautious with their spending.
That said, DMFI, which raised its prices in the US, will asset the group in offsetting the impact of inflation.
“A new growth stream is expected from DMFI’s recent acquisition of Kitchen Basics in the US, as well as from a new e-commerce infrastructure. Moreover, the group is planning to substantially increase its MD2 fresh pineapple production in support of exports of premium products,” says Del Monte in its statement.
Barring unforeseen circumstances, the group expects to generate a net profit in FY2023 after one-off redemption expenses incurred in the first quarter.
Shares in Del Monte closed flat at 31.5 cents on March 9.
