Del Monte Pacific Limited (DMPL) reported a 65 percent drop in net income for the first half of its fiscal year ending October 2023 to $19 million from the $54.1 million earned in the same period last year.

The firm said in a disclosure to the Philippine Stock Exchange that this is due to the one-off redemption cost of $50.2 million booked in the first quarter as subsidiary Del Monte Foods Inc. refinanced its loan with a long-term credit facility that has lower interest rates.

Without this one-off cost, net income would have been up 31 percent to $70.8 million during the period in review.

DMPL grew sales by 4 percent to $1.2 billion on higher USA and international sales, and gross margin improved to 29.2 percent from 28.0 percent during the first half. EBITDA increased by 7 percent to $194.5 million.

For the second quarter, DMPL generated sales of $698.9 million, up 7 percent with better performance in key markets across the USA, Philippines and international markets.

DMPL’s gross profit increased by 15 percent to $205.3 million with gross margin improving 200 basis points to 29.4 percent from 27.4 percent.

DMFI performed even better with gross profit of $141.8 million, up 19 percent. DMFI’s gross margin increased notably by 306 basis points to 28 percent from 24.9 percent as a result of selected price increases in line with inflation, reduced sales of low-margin products, and expense reduction initiatives.

As a result, DMPL generated a 38 percent stronger net income of $49.5 million in the second quarter this fiscal year versus prior year quarter’s $35.8 million.

“We are excited to share our buoyant second quarter results, a commendable feat in this inflationary environment,” said DMPL Managing Director and CEO Joselito Campos, Jr.

He added that, “We remained agile in seizing opportunities to generate better sales and profit, including avenues to lower our financing cost and expenses.”

DMFI, achieved sales of $506.3 million or 72 percent of Group turnover. DMFI’s sales increased by 6 percent on higher retail branded sales of canned vegetable, fruit, tomato and broth, coupled with incremental sales of US$12.1 million contributed by newly acquired Kitchen Basics ready-to-use stock and broth business.

After declining in the first quarter, Philippine market recovered strongly and generated second quarter sales of $107.9 million, 22 percent higher in peso terms and 8 percent higher in US dollar terms.

All product categories delivered higher volume and sales especially packaged fruit, culinary and innovation.

Foodservice resurgence towards pre-pandemic level continued, with sales up 21 percent behind the accelerating business of quick service restaurants (QSRs). With more outlets opening, convenience stores sales jumped 48 percent.

New innovations especially dairy and snacking are gaining traction, now accounting for 8 percent of Philippine sales.

International markets, composed of fresh produce and packaged goods, generated higher sales of $84.9 million, up 13 percent, driven primarily by the strong performance of fresh pineapple exports.

Fresh sales grew by 46 percent on the back of higher demand and consumer promotions in North Asia and Middle East, coupled with improved supply availability this quarter.