• Del Monte Q4 profits improve
  • However, consumer division sales fall
  • Earnings from consumer unit hit by lawsuit 

Another quarter of lower sales of consumer products has hit overall revenue at Del Monte Foods.

The US company today (22 June) reported a 1.7% fall in fourth-quarter net sales after sales of its consumer brands, which include canned products, fell 8.6%.

Del Monte's fourth-quarter profitability improved year-on-year as it lapped last year's figures, which included costs linked to the acquisition of the company by a private-equity led consortium.

However, profits from its consumer products division were lower in the quarter thanks to the lower sales and costs linked to the lawsuit filed against the company earlier this year by Fresh Del Monte Produce.

Over the year as a whole, Del Monte's sales and profits improved, thanks in the main to its pet products business.

Show the press release

 

Del Monte Corporation Reports Fiscal 2012 Fourth Quarter Results

SAN FRANCISCO--(BUSINESS WIRE)--Del Monte Corporation:

Announcement Highlights

For the fourth quarter fiscal 2012:

Net sales declined 1.7%

Pet Products sales increased 5.4% due to new product volume growth and list pricing actions net of trade spend

Consumer Products sales declined 8.6% due to unit volume declines

Operating income/(loss) increased from a loss of ($73.5) million in the prior year to income of $89.3 million mainly due to the absence of transaction costs related to the Merger

Adjusted EBITDA increased 10.4% to $166.0 million from $150.4 million

Total net debt was $3,580.3 million as of April 29, 2012

Del Monte Foods Three Months Ended April 29, 2012

Del Monte Foods today reported net sales for the fourth quarter fiscal 2012 of $934.6 million compared to $951.2 million for the three months ended May 1, 2011, a decline of 1.7%. Existing product unit volume declines drove the decrease. List pricing actions net of trade spend and new product growth, primarily in Pet Products, positively contributed to net sales for the quarter.

Operating income/(loss) increased from a loss of ($73.5) million in the prior year period to income of $89.3 million. The increase in operating income reflects the absence of transaction costs of $144.0 million in the prior year and list pricing actions net of trade spend, partially offset by the negative impact of unit volume declines (primarily in Consumer Products).

Adjusted EBITDA increased 10.4% to $166.0 million compared to $150.4 million in the prior year period. List pricing actions net of trade spend and lower SG&A were partially offset by higher operating costs and the negative impact of unit volume declines. In calculating Adjusted EBITDA, SG&A is favorable year-over-year because it does not include unusual litigation costs, amortization of intangibles, severance-related expenses and other expenses related to the Merger.

"Our fourth quarter results reflect solid performance from our new Pet Product launches and savings from productivity initiatives and we are optimistic about our business momentum," said Dave West, CEO of Del Monte Foods. "Our recent innovation launches of Meow Mix Tender Centers, Meow Mix Paté Toppers and Nature’s Recipe Grain Free had strong distribution gains. While we continue to face cost inflation and center store category headwinds similar to the rest of the industry, we are making strategic progress within Consumer Products. We also initiated several company-wide transformational initiatives to strengthen our go-to-market capabilities and drive further growth."

Reportable Segments – Results for Three Months Ended April 29, 2012

Pet Products

Pet Products net sales were $490.4 million, an increase of 5.4% from net sales of $465.2 million in the prior year period. The increase in Pet Products net sales was primarily driven by new product volume growth and list pricing actions net of trade spend. The increase was partially offset by unit volume declines in existing products.

Pet Products operating income increased 24.3% from $74.2 million for the three months ended May 1, 2011 to $92.2 million in the fourth quarter fiscal 2012. The increase was primarily due to list pricing actions net of trade spend.

Pet Products Adjusted EBITDA increased from $107.3 million for the three months ended May 1, 2011 to $113.6 million in the fourth quarter fiscal 2012, or 5.9%. The increase was primarily due to list pricing actions net of trade spend and lower SG&A. In calculating Adjusted EBITDA, SG&A is more favorable year-over-year because it does not include amortization of intangibles and severance-related expenses.

Consumer Products

Consumer Products net sales were $444.2 million, a decrease of 8.6% from net sales of $486.0 million in the prior year period. The decline in Consumer Products net sales was primarily due to unit volume declines in existing products, partially offset by list pricing actions net of trade spend.

Consumer Products operating income declined 29.3% from $14.7 million for the three months ended May 1, 2011 to $10.4 million in the fourth quarter fiscal 2012. The decline was primarily driven by the negative impact of the topline and higher SG&A expenses due to unusual litigation costs, partially offset by net pricing.

Consumer Products Adjusted EBITDA increased from $44.4 million for the three months ended May 1, 2011 to $52.0 million in the fourth quarter fiscal 2012, or 17.1%. The increase was primarily driven by list pricing actions net of trade spend and lower SG&A, partially offset by unit volume declines. In calculating Adjusted EBITDA, SG&A is favorable year-over-year because it does not include unusual litigation costs.

Del Monte Foods Fiscal Year Ended April 29, 2012

Net sales for the fiscal year ended April 29, 2012 were $3,676.2 million compared to $3,666.1 million for the prior year period, an increase of 0.3%. The increase was driven by new product volume growth primarily in Pet Products and list pricing actions net of trade spend. The increase was almost entirely offset by unit volume declines in existing products in both Pet Products and Consumer Products.

Operating income increased 9.1% from $339.3 million in the prior year period to $370.2 million. The increase was primarily driven by the absence of transaction costs included in the prior year period and list pricing actions net of trade spend. Higher operating costs largely offset the increase.

Adjusted EBITDA declined 10.6% to $590.7 million compared to $661.0 million in the prior year period. The decline was primarily driven by higher operating costs. List pricing actions net of trade spend and lower SG&A partially offset the decline. In calculating Adjusted EBITDA, SG&A is favorable year-over-year because it does not include amortization of intangibles, unusual litigation costs, severance-related expenses and other expenses related to the Merger.

Select Liquidity Data

At April 29, 2012, total debt was $3,983.1 million and cash and cash equivalents were $402.8 million. As of April 29, 2012, there were no outstanding borrowings under the Company’s $750.0 million ABL Facility. For the fiscal year ended April 29, 2012, capital expenditures totaled $81.8 million.

Free Cash Flow2 for the fiscal year ended April 29, 2012 was $281.5 million, compared to $333.8 million for the twelve months ended May 1, 2011. The decline was primarily due to higher cash interest payments and lower Adjusted EBITDA. Favorable working capital, lower cash taxes and lower capital expenditures positively impacted cash flow.

 

Original source: Del Monte Foods