DEL Monte Pacific Ltd. said its sales dropped 5 percent during its fiscal second quarter ending October on weaker sales in its United States unit.
The Campos-led company said its sales hit $636.2 million during the period, down from last year’s $666.8 million.
Its US subsidiary Del Monte Foods Inc., which accounted for 78 percent of group sales, generated a revenue of $493.3 million, down 9 percent from last year as a result of lower inventory builds on packaged vegetable and plastic-fruit cups ahead of the holiday season as major retailers continued their thrust to optimize cash.
There was also weakness in the canned-fruit industry, continued impact of unsuccessful low-margin US Department of Agriculture bids from the second half of the year, plus reduced sales in private label and foodservice business lines, the company said.
Without the one-off items, Del Monte said it achieved a net income of $21 million for the period, 33 percent higher than last year’s recurring net income of $15.8 million.
Inclusive of the one-off items, net income for the quarter was $20.2 million, or less than half of last year’s profits of $47.8 million. The one-off item included $1.5 million from closure of the North Carolina plant and severance were also booked in the second quarter of this year.
“This was part of the restructuring exercise started in fiscal year 2016 to optimize operations. In the prior year, due to a net one-time gain of $33.4 million resulting mainly from an amendment to [Del Monte Foods’] retirement plan,” it said.
“The excellent results in the Philippines and the S&W Asian markets, where our teams delivered on both sales expansion and productivity improvement resulting in cost reduction, underscore our strategy to tap into consumption driven growth in Asia which is fuelled by an emerging middle class while, at the same time, seeking to create efficiencies throughout our operations,” said Joselito Campos Jr., the company’s managing director and group CEO.
“Our US business has been impacted by shifting consumer preferences, spending priorities and our performance in the foodservice sector. The demand for convenient packaged foods remains strong and our aim is to increase our market share by doubling our efforts on innovation and new product development,” he said.