Del Monte Pacific Limited (DMPL) incurred a net loss of $21.6 million for the first half of its fiscal year (May to October 2023) from a net profit of $19 million in the same period of 2022 due to lower operating results.

In a disclosure to the Philippine Stock Exchange (PSE), DMPL said it grew sales by two percent to $1.2 billion on higher US sales; however, gross profit declined by 28 percent to $243.8 million on higher costs. 

Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by 41 percent to $115 million from $194.5 million.
 

“We faced a tough quarter as lower pineapple supply, higher costs and consumer spending trends impacted our margins and operating performance. In addition, higher interest charges also affected the Group’s bottom line,” said DMPL Managing Director and CEO Joselito Campos, Jr. 

He added that, “we expect that consumer spending will continue to be curbed by persistently higher living costs, mainly driven by high energy prices and rising borrowing costs. To address challenging market conditions, we will focus on effectively managing our inventory over the next 9 to 12 months."

He also said that additionally, "we will explore opportunities to enhance our capital structure, reduce leverage, and minimize interest expenses."

For the second quarter (August to October 2023), DMPL generated sales of $667.1 million, down five percent due to lower sales in the USA by subsidiary Del Monte Foods Inc. (DMFI), and lower exports of fresh and packaged pineapple by Del Monte Philippines Inc. (DMPI). 

Sales in the Philippine market were flat in US dollar terms.

DMFI achieved sales of $494.6 million or 74 percent of Group turnover. DMFI’s sales decreased by two percent mainly driven by the strategic shift away from lower-margin co-pack products that it packs for other manufacturers. 

Branded products grew by 0.5 percent in the second quarter, due in part to strong performance from the Joyba and Kitchen Basics brands, as well as growth in the foodservice channel. 

DMFI grew its leading market share positions across its core businesses of canned fruit, vegetable and tomato with higher-margin branded retail products increasing as a proportion of overall mix.

Growth continued within the foodservice segment, highlighted by the introduction of four-ounce branded fruit cups, developed and sold specifically for the vending machine and micro market channels. 

Its Philippine market delivered sales of $107.8 million, one percent lower in peso terms but flat in US dollar terms. Sales in the culinary and beverage segments experienced growth, driven by the launch of strategic campaigns. 

Del Monte also strengthened its market leadership in key product categories, including packaged pineapple, mixed fruit and spaghetti sauce behind programs driving occasion-based messaging, versatile recipe usage and expansion of value-for-money package formats. 

Foodservice and convenience store channels continued their growth momentum with sales up 15 percent and 13 percent, respectively, on new accounts, outlets and menu ideas.

Sales in the international markets declined by 30 percent on reduced Fresh and Packaged product sales. Lower sales of Fresh resulted from a lower supply for the quarter as majority of fruits had matured or ripened early and were thus harvested in the first quarter. The group expects a strong second half supply and sales recovery. 

The highly profitable Deluxe variant continued to accelerate, while the Group also benefited on some pricing moves. 

Packaged sales decreased with lower sales to USA due to their inventory correction and unserved demand in other markets due to lower pineapple fruit supply.