Del Monte Foods has today reduced its guidance for full year earnings per share on the back of the rising costs. The food group made the announcement whilst reporting its second quarter figures.
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Del Monte reported that it had achieved second quarter net sales growth of 5% to US$938.1m, reflecting volume growth from new and existing products.
Income from continuing operations was $26.7m, or $0.13 earnings per share from continuing operations (EPS), compared to $23.7m, or $0.12 EPS in the previous year.
Results for the second quarter fiscal 2008 include $0.01 of transformation-related expense, as compared to second quarter fiscal 2007 results, which included $0.06 of transformation-related expense, purchase accounting impact, and integration expense.
“We delivered solid top-line performance, driven primarily by strength in new products and organic growth,” said Richard G. Wolford, Chairman and CEO of Del Monte Foods. “However, our bottom-line continued to be pressured by aggressive cost increases, primarily in raw products, due to increased demand for alternative fuels and challenging fishing conditions. Looking forward, this severe industry-wide cost environment is expected to continue with costs increasing at rates greater than originally anticipated. Reflecting these higher costs, we are lowering our earnings estimate for the fiscal year. Our team continues to execute against our pricing actions and cost reduction programs as we work to meet these challenges. We remain confident in our continued strong cash flow and our commitment to return value to shareholders; accordingly we initiated our recently announced three-year, $200 million share repurchase authorisation.”
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By GlobalDataThe company said in a statement that it was maintaining its full year net sales growth guidance of 5%-7% above full year 2007 net sales of $3.4 billion.
However, it reduced its estimates for diluted EPS from continuing operations from the low end of $0.70-$0.74 to $0.64-$0.68.
For the fiscal 2008 third quarter, the company said it expects to deliver sales growth of approximately 5% to 7% over net sales of $907.2 million in the third quarter of fiscal 2007. Diluted EPS from continuing operations is expected to be approximately $0.22 to $0.26, compared to $0.22 in the third quarter of fiscal 2007.
Benefiting the third quarter fiscal 2008 is an expected gain from the recent sale of S&W trademark and related assets in the Eastern Hemisphere.
