Branded and private label food producer Del Monte Foods has reported rises in sales and net income for the second quarter ended 30 October 2005, bolstered by higher prices and increased volume from new products.
Net income for the quarter was US$43.9m, compared with US$41.6m a year earlier, while sales were US882.3m, compared with US$846.6m a year ago.
Del Monte’s year-over-year second quarter earnings increase was driven primarily by the strong top-line performance, offset by increased steel, energy, logistics and other transportation-related costs as well as unfavourable mix, the company said. Lower interest expense and the benefits from the share repurchase program also contributed to higher earnings per share.
The increase in net sales was driven primarily by increased pricing and volume growth from new products, partially offset by expected volume loss associated with price increases, Del Monte said.
“We are pleased with our top-line, business building momentum which continued in the second quarter behind positive pricing and new product introductions, both enabled by our strong brands,” said Richard G. Wolford, chairman and CEO of Del Monte Foods. “We continued to strengthen Del Monte’s foundation for the future by executing on our brand-focused strategic plan. This strategy builds on the powerful consumer trends towards health and wellness and the growing importance of pets, both of which positively benefited our performance during the second quarter.”
“In the second quarter, our company also experienced continued steel, energy and transportation cost increases which pressured margins,” he said. “To offset these increases, we continued to execute against our ongoing cost reduction program as well as benefit from prior pricing actions.”