US food group Del Monte Foods is optimistic that its consumer business will bounce back in the second half.
The firm today (2 September) recorded an increase in first quarter profits and reaffirmed its full-year guidance.
However sales dropped 1.1% as a result of a 6% slide in its consumer products division and a 3.6% drop in its pet products business.
Richard Wolford, CEO of Del Monte Foods said the firm’s consumer business remained a challenge in the first quarter.
“That is alluded to primary factors, i.e. non-retail that impacted us in the first half,” Wolford said. “The second part of the decline is the retail business and that has two parts, one is promotional activity and the other is category softness in value channels.”
Nonetheless, Wolford remained confident that the issues would adjust themselves in the second half.
“We believe our customers in those channels will address the issue of traffic and we are working with those customers in terms of product assortment and programmes and we hope they will return to typical performance levels,” Wolford told analysts.
“The reason for optimism in the back half is that pet growth will continue and consumer growth is being addressed now, which will improve as we continue to go through the year as dislocation from aggressive promotional activity dissipates,” he added.
And despite conceding that M&A activity for the company remained “fairly bare” at the present time, Wolford indicated that the company was ready if an opportunity arose.
“We do like our portfolio as it is structured today, all of our projections and growth are based on our current portfolio, we have increased our dividend and we’re feeling really good about our cash,” Wolford said.
“Generally we look at where we can amplify our portfolio to drive growth, we have a good platform in US, great customers and we believe that this provides us with a platform for growth both internally and through acquisitions.”