Del Monte Pacific Limited reported a 64 percent jump in net profit to $35.8 million in the second quarter ending in October of its fiscal year 2022, from $21.9 million in the same quarter last year.
In a disclosure to the Philippine Stock Exchange, the firm said it continued to improve its gross margin by 180 basis points to 27.4 percent mainly from better sales mix with increased sales of higher-margin retail branded products in the US.
The group generated sales of $651 million, up four percent versus prior year period from improved sales in the US and international markets.
DMPL’s US subsidiary, Del Monte Foods Inc. (DMFI), generated sales of $477.5 million or 73 percent of group sales.
DMFI’s second quarter sales increased by seven percent on strong branded retail growth of 11 percent, while sales of low-margin private label were reduced as planned. New products launched in the past three years contributed 5.3 percent to DMFI’s total sales.
The robust performance of branded retail resulted from supply and distribution gains, strong underlying momentum on core vegetable businesses and shipments in preparation for the Thanksgiving holiday promotional activity.
Del Monte canned vegetable, which had the highest contribution to branded retail sales, reached a five-year high of 24 percent market share in November.
The group’s second largest and most profitable subsidiary, Del Monte Philippines, Inc. (DMPI), achieved higher sales of $186.1 million in the second quarter, up three percent versus the prior year period led by international market sales.
More than half of DMPI’s sales are in the Philippines, with the balance in the international market.
DMPI achieved a five percent EBITDA increase to $40.6 million and a 10 percent net profit increase to $26 million. DMPI had benefited from the reduced corporate tax rate of 25 percent with the passing of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) in March 2021.
DMPI’s sales in the international market rose 18 percent to US$69.7 million on robust sales of packaged fruit and beverages in the USA and Europe, and S&W packaged pineapple and mixed fruit in North Asia.
For the first half, total fresh sales grew by five percent with the S&W-branded pineapple up by a stronger 15 percent. S&W pineapples sold in China benefitted from expanded distribution coverage with 1,500 new stores from the Company’s top three distributors in China.
The company expects improvement in the second half as it continues to expand into Tier 2-3 cities in China with the sustained strong support of its distributors.
Sales in the Philippines of $100.2 million were six percent lower in US dollar terms and two percent lower in peso terms, comparable with the high base of the prior year brought about by the pandemic.
“DMPL stayed on its course to deliver a very strong financial performance for the quarter and achieved record results for the first half,” said DMPL Managing Director and CEO Joselito Campos, Jr.
He added that, “We look forward to sustaining the momentum into the second half of the year with an improved sales mix, higher new product contribution and diversified channels to expand our brand footprint.”