Mainboard-listed Del Monte Pacific today announced a net loss of US$0.9 million ($1.2 million) for the first quarter of 2010 compared to a net profit of US$4.1 million in the same period last year due to higher raw material costs and higher advertising, promotion and selling expenses.

Key drivers of costs, which increased by US$4.5 million in the quarter, were sugar, which more than doubled vs year ago, and pineapple production costs which were affected by higher input costs and lower supply.

Advertising, promotion and selling expenses increased by US$2.3 million to support new product launches and improve market coverage.

“We are taking robust measures to deal with the higher costs and, while first half 2010 profits will be lower compared to that of the same period last year, we expect improvement in the second half performance,” said Joselito D. Campos, Jr., Managing Director and CEO of DMPL.

To mitigate high sugar costs, the company is increasing usage of natural sugar recovered from pineapple and utilising alternative natural sweeteners. At the same time, the sugar content in certain products is being reduced for a healthier offering. The company is also reviewing the potential of sourcing lower cost products from affiliate companies. Cost containment measures, including fixed cost management, and business building initiatives are expected to restore profitability in the second half of the year.

Sales grew by 9% to US$65.9 million from US$60.4 million in the prior year quarter due to higher turnover of fresh and processed pineapple exports and S&W products.

Fresh fruit sales registered remarkable growth vs last year, growing more than three-fold on the back of higher volume and better prices. Sales of S&W processed products continued their growth momentum this quarter, growing 40% vs prior year quarter, primarily driven by the strong performance in Singapore and Hong Kong.

Sales in the Philippines grew marginally by 2% as higher sales of culinary products led by the new “Sandosenang Sarap” seasoning mix and Del Monte Salad Cream helped offset declines in other categories. The beverage segment was flat as high sales in other juices offset softening Del Monte Fit ‘n Right juice drink sales as the latter continues to face aggressive competition in the market. This is being addressed with a new campaign to be launched soon.

For the quarter, the group recognised a share of loss in FieldFresh India of US$0.9 million, which is slightly higher than the US$0.8 million recognised in the same period last year due to business building activities. Del Monte products are now in 15,000 outlets in 25 cities in India. Two new products were launched recently — Del Monte Zingo and Twango. These sauces offer two twists on ketchup suited to favourite Indian and Asian snacks such as samosas, pakoras and kebabs. Zingo combines red chillies, red bell pepper, garlic and ginger, while Twango is a blend of pineapple and tomato.