Del Monte Pacific reported lower first quarter losses, with an improved operating performance propelled by sales growth in the US and Philippines.
The company, which is listed in the Philippines and Singapore, said its net loss narrowed to US$12m in the three months, almost half the $22m loss reported in the comparable period of last year. The group lapped high financing costs in the prior year period, caused by the elevated levels of debt it took on to fund the acquisition of US food maker Del Monte Foods. Del Monte Pacific has since taken a number of measures to reduce its exposure to short term debt, including a rights issue.
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The company said the net loss in this quarter was the result of a number of seasonal factors as well as the rollout of systems, applications and products software across the enterprise. "The net loss was attributed to DMFI’s first quarter being the seasonally weakest, in addition to expenses from the SAP implementation. The El Niño weather pattern also caused reduced pineapple supply in the group’s plantation in the Philippines leading to lower exports."
Del Monte stressed that its gross margin was up in the period and EBITDA rose to $17.3m versus an operating loss of $12.1m last year.
The improved operating performance also reflected higher sales and market share gains, Del Monte said. Sales were up 6% to $473m, driven by a 10% increase in US revenue and a 7% rise in sales in the Philippines.
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CEO Nils Lommerin said that he expects the group's performance to accelerate in the back half of the year. "Our financial performance tends to be skewed towards the second half of our fiscal year when Del Monte is the brand of choice for festive occasions. As we continue to unlock the growth potential of our products, accelerate our penetration of the food service sector and ethnic Asian market as well as enter new vegetable segments, our results will improve further."
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By GlobalDataThe group said it expects a return to profitability in the fiscal, generating more free cash flow and allowing further deleverage.
