Del Monte Pacific's net loss narrows 18.3% to $11.8m in Q1
Thanks to its strong performance in the Philippines market.
Despite gaining traction in its Asian market, Food and Beverage (F&B) company Del Monte Pacific still registered net loss in its first quarter, with sales falling 2.8% to $628.9 million due to lower non-branded sales in the United States.
The group explained in a press statement that its US subsidiary, Del Monte Foods, Inc (DMFI), which accounted for 75% of Group sales, generated revenue of US$350.9 million, 6% lower than prior year quarter.
"This is due to the continued impact of unbranded sales, ie unsuccessful low-margin US Department of Agriculture bids from the second half of FY2016 plus reduced sales in private label and foodservice business lines," the group said in a statement," the group noted.
However, its net loss in the previous year of of $14.5 million have improved 18.3% to $11.8 million this year, partially helped by the strong performance in the Philippines under the Del Monte brand, and the rest of Asia under the S&W brand.
"Del Monte delivered a strong performance in the Philippines in the first quarter, with sales up 14% in peso terms, driven by expanded penetration and increased consumption of its packaged pineapple, culinary products and beverages as a result of new advertising campaigns. Foodservice channel continued to outperform the market, growing by 28% in peso terms," the group explained.
Meanwhile, it exhibited strong earnings before interest, taxes, depreciation and amortization (EBITDA), spiking 20% higher to $32 million. This is due to lower operating expenses as a result of initial savings from the group's restructuring.
According to Del Monte Pacific CEO Joselito Campos, the group's first quarter is seasonally its weakest quarter accounting for only 19-21% of full year sales. Dipping sales also reflect on profit performance where the group historically endures a loss in the first quarter.
He claimed the sales would peak in the second and third quarter due to holidays like Thanksgiving and Christmas.
"With the first quarter being seasonally the weakest quarter in the US, we expect improved profitability in the coming quarters. We continue to align operations with our strategic direction to strengthen the Group's core business, gain market share, increase margins and expand into adjacent categories as part of a long-range plan to grow our sales and profits in the years ahead," he said.