SINGAPORE (Sept 9): Food and beverage (F&B) company Del Monte Pacific posted a net loss of US$8.7 million ($11.8 million) for the three months ended 31 July, narrowing 18.3% from its net loss of US$10.7 million a year ago on higher operating profit.

Group revenue was down 2.8% to US$465.5 million, 3% lower from US$478.7 million in 1Q16 year due to lower non-branded sales in the US.

This was partially because its US subsidiary, Del Monte Foods Inc (DMFI), which accounted for 75% of 1Q’s group sales, generated 6% lower revenue from the prior year due to the continued impact of unbranded sales.

In a Thursday filing, Del Monte says DMFI historically incurs a loss in the first quarter, which is seasonally its weakest quarter and accounts for only 19-21% of full-year sales.

The losses were partially offset by the group’s operating profit, which more than doubled to US$6.8 million due to the rise of operating margin by 0.9 percentage points.

Del Monte also reported strong performances in the Philippines under the Del Monte brand, with sales up 14% in peso terms; as well as sales of the S&W branded business in Asia and the Middle East, which rose 12% in the first quarter mainly due to strong sales of canned fruit in North Asia on the back of improved distribution.

EBITDA was 20% higher than the prior year at US$23.7 million, which would have stood at US$28.6 million if it was not dragged down by US$4.9 million of one-off expenses before tax which included closure of the group’s North Carolina plant. The higher EBITDA was due to lower operating expenses, which resulted from initial savings from a restructuring that started in FY2016.

“With the first quarter being seasonally the weakest quarter in the US, we expect improved profitability in the coming quarters,” says Joselito D Campos, Jr, managing director and group CEO of Del Monte.

“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.”

Del Monte says it will continue to be profitable for FY17.

(See also: <a href="http://www.theedgemarkets.com.sg/sg/article/del-monte-pacific-back-black-fy16-earnings-us515-mil" target="_blank">Del Monte Pacific back in the black with FY16 earnings of US$51.5 mil</a>)

As at 9:25am, shares of Del Monte Pacific are trading 1.35% lower at 36.5 cents.

Del Monte Pacific’s 1Q net loss narrows 18.3% to $11.8 mil

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Del Monte Pacific’s 1Q net loss narrows 18.3% to $11.8 mil

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