Costs linked to last year’s takeover of Del Monte Foods – and higher commodity prices – have led the US food group to post a quarterly loss.
On Friday (9 September), Del Monte, which was acquired by a consortium of private-equity investors in March, booked a first-quarter loss of US$27.6m for the three months to the end of July. A year ago, Del Monte reported first-quarter net income of $59.4m.
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Operating income dropped 58.7% to $49.3m as profits from Del Monte’s consumer and pet food businesses fell. Del Monte said operating income from its consumer food divison was down 58%.
Net sales fell 3.5% to $776.2m as volumes dropped from both divisions. Del Monte saw its consumer food sales decrease by 6.1% to $377.3m.
Del Monte CEO Dave West, who formally joined the company from Hershey on 15 August, said the canned food maker had reported “challenging” results.
However, he said his “initial assessement” of Del Monte was that “our portfolio of brands is strong and well-positioned in on-trend categories”.
West said the company had raised prices to offset commodity pressure but said there was a lag in getting price increases in place on shelf. He also pointed to “heavy competitive promotional activity” in the quarter.
“In the short-term, we expect the marketplace will continue to reflect high input cost inflation, a challenging consumer sentiment, a price-seeking consumer and heightened manufacturer promotional activity. Longer-term, we expect to benefit as we neutralise input cost inflation with price realization and productivity savings as well as through the benefit of new product introductions,” he said.
“While current challenges exist, we are focused on the long-term health and growth of the company by continuing to invest in marketing and innovation.”
