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Del Monte reports 14.0% lower earnings of US$25.9 mil for 3QFY2022 on lower gross profit margin

Felicia Tan
Felicia Tan3/10/2022 06:21 PM GMT+08  • 3 min read
Del Monte reports 14.0% lower earnings of US$25.9 mil for 3QFY2022 on lower gross profit margin
Barring unforeseen circumstances, the group expects to generate a higher net profit in FY2022.
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Del Monte Pacific (DMPL), the Singapore- and Philippine-listed food and beverage (F&B) company, reported earnings of US$25.9 million ($35.3 million) for the 3QFY2022 ended January, 14.0% lower than earnings of US$30.2 million in the corresponding period the year before.

Revenue during the quarter increased by 4.9% y-o-y to US$659.4 million, driven by higher sales in the US across almost all major categories.

Higher exports of S&W branded premium fresh pineapples also contributed to the revenue growth.

During the 3QFY2021, the group’s US subsidiary, Del Monte Foods, Inc. (DMFI) generated US$468.4 million in revenue, which made up 71.0% of the group’s total sales.

DMFI’s revenue increased by 6.5% y-o-y due to higher sales from branded retail comprising mainly of core canned vegetable and fruit. The higher sales more than offset the planned reduction in private label sales.

Sales from the food service channel grew significantly as the business continues to recover behind strong fruit sales in support of re-opening of schools and restaurants.

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Gross profit for the 3QFY2022 fell 9.1% y-o-y to US$97.7 million as gross profit margin (GPM) fell 3.5 percentage points y-o-y to 20.9% as higher manufacturing cost offset benefits from the higher sales.

The higher manufacturing cost was mainly attributable to the commodity headwinds, weather-related events and freight headwinds particularly ocean freight on co-pack products.

3QFY2021 EBITDA fell 8.1% y-o-y to US$91.0 million due to the lower GPM.

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For the 9MFY2022, earnings grew 64.2% y-o-y to US$80.1 million as the group’s revenue increased 6.5% y-o-y to US$1.77 billion.

During the period, DMFI saw net profit triple to US$35.2 million, while Del Monte Philippines’ net profit increased by 15% y-o-y to US$81.5 million.

9MFY2022 gross profit increased by 12.4% y-o-y to US$475.1 million, while GPM rose 1.4 percentage points y-o-y to 26.8% for the period.

9MFY2021 EBITDA stood at US$273.3 million.

No dividends were declared for the quarter.

As at end-January, cash and cash equivalents stood at US$33.3 million.

In its outlook statement, the group says it is “well-positioned” to respond to consumer trends due to the nature of its nutritious products which also have long shelf lives.

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In addition, the group is addressing the impact of inflation from commodity headwinds and increased transportation costs through revenue and cost drivers including driving efficiencies and productivity across operations.

Barring unforeseen circumstances, the group expects to generate a higher net profit in FY2022.

“Cost headwinds in the third quarter were quite significant impacting margins and profits,” said Joselito Campos, Jr., DMPL’s managing director and CEO. “Our strong results for the first nine months allowed us to be substantially ahead of last year. While the road ahead has many challenges, we remain relentless in our revenue-enhancement and razor-focused on cost-saving initiatives.”

Shares in Del Monte closed 0.5 cent higher or 1.27% up at 40 cents on March 10.

Photo: Del Monte

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