Del Monte Pacific Limited (DMPL), the world;s leading pineapple producer, reported a strong 64 percent growth in net income to $80.1 million in the first nine months of its fiscal year ending in April 2022.
In a disclosure to the Philippine Stock Exchange, the firm said earnings rose as gross margin increased by 140 basis points to 26.8 percent from 25.4 percent on favorable sales mix from improved sales of higher- margin retail branded products and selective price increases made to counter inflation.
The group’s US subsidiary Del Monte Foods Inc. reported that its net profit tripled to $35.2 million while net income of Del Monte Philippines Inc. increased by 15 percent to $81.5 million.
The group’s second largest and most profitable subsidiary, Del Monte PhiIippines, Inc. increased sales by six percent to US1.8 billion on higher sales in USA, S&W fresh and packaged products.
“Cost headwinds in the third quarter (November to January) were quite significant impacting margins and profits,” said DMPL Managing Director and CEO Joselito Campos, Jr.
He noted that, “Our strong results for the first nine months allowed us to be substantially ahead of last year. While the road ahead has many challenges, we remain relentless in our revenue-enhancement and razor-focused on cost-saving initiatives.”
Amidst a high-cost environment, the Group remains vigilant in managing its costs. DMFI has embarked on a number of cost optimization initiatives including distribution center consolidation and increased use of rail instead of trucks to save on fuel cost.
Barring unforeseen circumstances, the Group expects to generate higher net profit in fiscal year 2022.
For the third quarter of fiscal year 2022, DMPL generated sales of $659.4 million, up 5 percent from higher sales in the USA and fresh pineapple exports. DMFI achieved sales of $468.4 million or 71 percent of Group sales.
DMFI’s sales increased by 6 percenton higher branded retail primarily canned vegetable and fruit which more than offset the planned reduction of low-margin private label.
Del Monte canned vegetable, which had the highest contribution to branded retail sales, saw a 4 percentage point increase in market share on the back of strong commercial execution, increased distribution on core products, new products including multi-packs, and superior supply chain service. Canned fruit and fruit cup snacks also registered a higher share.
DMPI achieved sales of $197.1 million, up 5 percent in peso terms but flat in US dollar terms on higher exports of S&W branded fresh pineapple to North Asia. More than half of DMPI’s sales are in the Philippines, with the balance in the international market.
Sales in the Philippines recovered after two quarters of decline coming off a very strong fiscal year 2021. Sales grew by 4 percent in peso terms to $117.3 million driven by good performance of both core categories, packaged fruit and beverage, and new products.
Beverage increased by 7 percent behind consumer upsizing to better value multi-serve carton packs. Foodservice sales rose 11% on healthy and higher margins.
Strong sales of the premium fresh pineapple segment benefitted from expanded distribution coverage in China from existing distributors, plus new distributors which have supported the continued expansion into Tier 2-3 cities.