Shares in US food group Del Monte Foods soared over 17% in early trading today (3 December) after the company posted rising half-year earnings and raised its profit forecast for the rest of the year.
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Del Monte booked net income of US$40.3m for the six months to 26 October, up from $29.4m a year earlier.
Income from continuing operations, however, fell from $27.4m last year to $19.3m. Earnings per share also dipped, falling from $0.13 to $0.10 due to rising raw material costs, charges linked to moves to centralise some executive functions in San Francisco and higher marketing costs.
Nevertheless, those results failed to dilute the upbeat tone from Del Monte, which pointed to rising earnings during its second quarter.
Del Monte, which completed the sale of seafood business StarKist during its second quarter, said income from continuing operations reached $27.3m during the three months to 26 October – up from $25.7m a year earlier.
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By GlobalDataEarnings per share rose from $0.13 to $0.14, while net income jumped from $25.9m to $50.4m. Six-month net sales climbed 13.4% to $1.63bn.
In all, the results led Del Monte to up its full-year sales guidance from growth of 6-8% to 8-10%.
The company kept its full-year earnings per share guidance of $0.58-0.62 but said it now expects to hit the “midpoint” rather than the lower end of the range.
Chairman and CEO Richard Wolford said the company’s performance reflected the moves it was making to combat rising costs through higher prices and improved productivity.
“We are making the investments to unleash the power of our core brands and drive our pet and packaged produce growth engines,” Wolford said. “We believe this strategy will deliver our fiscal 2009 goals and drive future EPS growth. Importantly, our execution against increased marketing investment and leveraging a more marketing-centric organisation are key to driving our success.”
Shares in Del Monte were up 17.36% to $6.49 at 10:44 ET today.
