Del Monte Pacific Limited expects to generate a higher net profit for its fiscal year ending in April 2024, especially in the second half or November to April, after reporting lower losses for the months of May to July.

“As a result of lower gross profit and increased interest expense, DMPL reported a net loss of $13.1 million versus prior year quarter’s net loss of $30.5 million,” the firm disclosed to the Philippine Stock Exchange (PSE). 

It noted that last year’s net loss had included Del Monte Foods Inc.'s (DMFI) one-off refinancing cost of $71.9 million gross or $50.2 million net of tax and non-controlling interest.

“Our margins were under pressure with inflation while interest rates rose, affecting the Group’s bottom line,” said DMPL Managing Director and CEO Joselito Campos, Jr. 

He added that, “we are determined to bring margins up in the second half of our fiscal year through a combination of price adjustment and cost reduction, including minimizing waste further by continuously improving processes, and leveraging technology to enhance efficiency and lower expenses.”

“Reducing leverage and interest expense is a key imperative and we are exploring all options to strengthen our capital structure,” Campos said.

To boost profits, the firm aims to increase penetration in the US into channels such as club, e-commerce, dollar, convenience, natural and foodservice, while accelerating innovation and its contribution to spur sales growth. 

New market development initiatives in Mexico, South America and Canada driven by resources dedicated to expanding distribution of DMFI’s branded portfolio in those markets. 

The price increase implemented in the USA last July 31 will also allow DMFI to offset inflation and improve gross margins in the second to fourth quarters of fiscal year 2024.

The group is also planning to substantially increase production of its superior MD2 fresh pineapple to support higher exports of these highly sought after premium products.

With its heightened emphasis on prudent financial management, the group is embarking on a strong debt reduction program by optimally using internally generated cash for debt repayment. 

DMPL is also considering the issuance of appropriate equity instruments in order to increase its capital.

The firm generated sales of $516.7 million, up 13 percent with better sales in the US and fresh pineapple exports. Philippines sales were five percent higher in peso terms but flat in US dollar terms with the strengthening of the latter.

The group’s US subsidiary DMFI achieved sales of $356.4 million or 69 percent of group turnover. 

DMFI’s volume grew by five percent while sales improved by 18 percent driven by pricing actions and strong growth and development of the company’s branded product portfolio in both traditional and emerging channels.

The Philippine market delivered sales of $75.9 million as sales of packaged fruit, beverage and culinary were higher, supported by compelling communication campaigns.

Del Monte improved its market leadership shares in all its five core categories of packaged pineapple, mixed fruit, beverage, tomato and spaghetti sauces, with notable increases in fruits behind consumption-building efforts. 

Foodservice and convenience store channels continued their strong performance with sales up 25 percent and 16 percent, respectively, on new accounts, outlets and menu ideas.

In other markets overseas, Fresh sales saw strong expansion, up 23 percent, driven by increased sales of premium higher-margin S&W Deluxe fresh pineapples as well as better pricing. 

DMPL’s gross profit declined by 18 percent to $108.3 million with a gross margin of 21 percent. Declines were driven by inflationary factors which had increased the group’s product costs.