Pandemic spending returns Del Monte Pacific to profitability

Published March 11, 2021, 5:05 PM

by James A. Loyola

Del Monte Pacific Limited reported a net profit of $48.8 million for the first nine months of its fiscal year ending in April 2021, significantly reversing a net loss of $69.0 million in the prior year.

In a disclosure to the Philippine Stock Exchange, the firm said it generated sales of $1.7 billion, 12 percent better versus prior year period.

Del Monte Foods Inc., the Group’s US subsidiary, delivered 12 percent higher sales of US$1.2 billion — accounting for 69 percent of Group sales. The Philippines also increased sales by 17 percent.

The Group achieved close to a 3-fold increase in EBITDA to $235.8 million from $86.3 million and generated a DMFI’s asset-light strategy and other cost saving initiatives yielded about US$34 million to $35 million savings in the first nine months of this year.

DMPL said it is on track to recouping within two years the one-off expenses incurred from its plant closures last year. 

“DMPL returned to profitability in FY2021 and is well-positioned in this environment given its nutritious, long shelf-life products which enable consumers to prepare meals at home and build their immunity amidst the pandemic,” said DMPL’s Managing Director and CEO Joselito D Campos, Jr.

He noted that, “As consumers prioritize health and wellness, the Company is well-placed to grow with this trend.” 

For its third quarter results ending January 2021, DMPL said sales of $628.4 million were higher by 13 percent versus prior year quarter driven by increased sales in the US, Philippines and international markets.

DMFI, generated 70 percent of Group revenues and achieved 12 percent higher sales of $440.0 million, mainly driven by robust sales growth of 26 percent in the branded retail segment amidst the coronavirus pandemic.

Core categories of vegetable and fruit delivered substantial growth as consumers chose trusted, healthy and shelf-stable products for their meal preparation at home. E-commerce sales saw significant increase continuing the strong growth momentum. 

The core businesses of DMPI are the Philippines and S&W Asia. In the third quarter, DMPI expanded sales in the Philippines by 20 percent despite the weakened economy and high unemployment.

Both retail channels of modern trade and general trade delivered robust performance with sales growth of 27 percent, offsetting declines in foodservice.

DMPI also expanded its presence in e-commerce, investing in both digital capability and partnerships with leading online platforms Lazada and Shopee.

This resulted in significant growth in e-commerce sales during the lockdown period which continued even post-lockdown, albeit from a low base. 

International sales of processed products increased by 23 percent, while fresh pineapple exports grew by 11 percent in the third quarter versus the same period last year.

“Our US business has turned around with two consecutive quarters of earnings. Consumers continue to place their trust in our brands and products which promise high quality and nutrition,” said Campos.

He noted that, “We are also reaping the benefits from considerable cost savings achieved through the execution of an asset-light model in the US along with greatly improving efficiencies we have implemented in our supply chain.”