Del Monte Pacific (DELM SP) (DMPL.SI) returned to profitability with a net profit of US$3.9 million ($5.5 million) in the fourth quarter of 2009 compared to a net loss of US$1.7 million in the third quarter. This is significantly lower than prior year quarter’s net profit of US$19.2 million mainly due to higher input costs, lower volume in the export markets and foregone sales in the Philippine market.

Sales for the quarter declined by 6% to US$115 million from US$122 million a year ago, mainly due to the 25% drop in sales to Europe and North America, reflecting continued softness in consumer demand.

Total sales in the Philippines were down in the fourth quarter by 2% as beverage registered lower sales. Sales of Del Monte Fit ‘n Right juice drink were lower mainly due to increased competition. All other product categories, except for beverage, registered higher sales in the fourth quarter on improved volume from better offtake, aided in part by higher trade promotion.

S&W, both processed and fresh, generated sales of US$2.8 million or 11% higher than prior year quarter, mainly due to the strong performance of the fresh segment.

Group gross profit and operating profit were significantly lower by 39% and 65%, respectively, versus the same period last year largely due to higher input costs and foregone sales. Pineapple cost per unit increased due to lower supply and higher fertiliser and chemical costs, while tinplate and tomato paste costs were also higher.

Moreover, the group had foregone sales of US$14.1 million and foregone operating profit of US$5.7 million for the Philippine market, due to constraints arising from supply issues, which are now being addressed.

As expected, the company’s equity share of loss in the company’s Indian joint venture, FieldFresh, increased to US$1.1 million from US$0.3 million in the prior year quarter. This was due to brand building investments through higher marketing and organisational expenses to support the expansion of the company’s fruit drinks, packaged fruits, ketchup & sauces and Italian range products across more cities.

On the other hand, sales more than tripled to almost US$5 million and product contribution margins improved significantly on better sales mix, with contributions from the Del Monte branded processed foods business and the rationalised product range in fresh exports under the FieldFresh brand. A new plant for FieldFresh will come on stream in the second half of the year, supporting the growth of the branded processed foods business as well as saving tariffs currently paid by FieldFresh for products imported into India. The plant will produce beverage and culinary products.

The group posted a net profit of US$3.9 million in the fourth quarter of 2009 from US$19.2 million in the prior year quarter bringing full year 2009 profit to US$11.3 million from US$37.0 million in 2008.

Operating cash flow improved significantly to US$61.3 million from US$15.1 million in the prior year quarter mainly due to lower levels of receivables as a result of discounting and lower levels of inventory. The company ended with a net debt position of US$36.1 million as of 31 December 2009, translating to a net gearing of 18%, an improvement from prior year’s 31%.

The Company expects improved profitability in 2010 as compared to that of 2009. However, as the results of the Company’s action plan will not have an immediate effect, first half 2010 profits may be lower compared to that of the same period last year.

The board has proposed a final dividend of US$0.0016 per share, representing a 75% payout of second half net profit for 2009.