Del Monte Pacific Limited reported its first quarter FY2020 results ending July. The Group reported a gross profit of US$91.1 million, 17% higher than the prior year quarter, and much improved gross margin of 24.3%, up 6.5 percentage points mainly due to increased prices in the USA and Philippines, higher sales of fresh pineapple, divestiture of the low-margin Sager Creek vegetable business and reduced sales of low-margin private label, thus improving sales mix.
The Group reported an EBITDA of US$36.6 million, significantly higher than the prior year quarter’s EBITDA of US$18.8 million. This quarter’s EBITDA included US$2.1 million of one-off expenses mainly related to severance and loss on partial disposal of assets of a plant in Crystal City, Texas.
In preparation for its capital raising initiatives, DMPL’s Philippine subsidiary, Del Monte Philippines, Inc, declared a dividend to its parent which was taxed at 15% amounting to US$39.6 million. Consequently, the Group reported a net loss of US$38.3 million for the quarter versus a net income of US$3.0 million in the prior year quarter. Excluding one-off items, the Group would have posted a recurring net income of US$4.1 million, a turnaround from the net loss of US$3.7 million in the prior year quarter.
The Group generated first quarter sales of US$375.9 million, which were, however, 14% lower than the prior year quarter mainly due to lower sales in the USA partly offset by higher sales in the Philippines and S&W business in Asia.
The Group’s US subsidiary, Del Monte Foods, Inc (DMFI), contributed US$241.4 million or 64% of Group sales. Sales declined by 22% mainly due to the divested Sager Creek business and reduced sales of low-margin non-branded business. Gross margin significantly improved by 7.4 ppts to 20.3% versus the prior year quarter’s 12.9%.
Del Monte continued to diversify beyond the canned goods aisle and introduced innovative products in the growing categories of refrigerated produce and frozen to cater to demand for health and wellness, snacking and convenience.
Prospects
The Group will continue to strengthen its product offerings and enter new categories, in line with market trends for health and wellness, snacking and convenience. It will grow its branded business and reduce non-strategic, non-branded business segments. The Group also continues to review its manufacturing and distribution footprint in the US to further improve operational efficiency, reduce costs and increase margins amidst expected cost headwinds including rising metal packaging prices and impact of tariffs imposed by the US.
Certain one-off expenses are expected in FY2020 from streamlining of operations. The Group is committed to improve cash flow, further strengthen the balance sheet, and reduce leverage and interest 4 expense. Barring unforeseen circumstances, the DMPL Group is expected to be profitable in FY2020 on a recurring basis.
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For more information: 
Iggy Sison
Del Monte Pacific Unlimited
Tel: +632 856 2888
Email: [email protected]