Del Monte Foods has reported net sales of US$314.9m and net income of US$14.2m, or US$0.27 per share, for the Q4 ended 30 June 2002, compared to net sales of US$341.5m and a net loss of US$11.8m, or US$0.23 per share, in the prior year period.
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Adjusted net income for the quarter was US$18.3m, or US$0.34 per share, compared to US$18.1m, or US$0.34 per share, in the prior year period. Adjusted earnings per share (EPS) of US$0.34 for the quarter compare favourably to the consensus estimate of analysts as reported by First Call of adjusted EPS of $0.28.
“FY 2002 was a very significant year for Del Monte. We met our annual operating and financial objectives and set the foundation for future increased shareholder return,” said Richard G. Wolford, chairman and CEO: “We successfully executed upon our four key strategic initiatives, met or exceeded our financial goals, and announced a transforming transaction with the HJ Heinz Co that will bring higher margin, powerful brands to the Del Monte portfolio and more than double our size.
“On the strategic front, we completed the integration of our S&W acquisition, successfully implemented our 1 July 2001 price increase, continued new product innovation and dramatically reduced our debt. As a result of these efforts, we were able to deliver on the top-line, beat our bottom-line targets and generate significant cash flow, which enabled the company to exceed its debt reduction goals.”
The year on year drop in Q4 net sales was due to volume declines caused by category softness, in part, as a result of the 1 July price increase, as well as share softness for Del Monte caused by relatively higher levels of competitive merchandising. Lower sales were also caused by lower FY 2002 sales of surplus inventory versus FY 2001. Adjusted EPS reflect improved margins due to higher average pricing, favourable sales mix, lower marketing expense and lower interest expense, offset by the lower sales and lower returns on pension assets.
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By GlobalDataFY 2002 highlights
The company reported net sales of US$1,322.4m and net income of US$38.5m, or US$0.73 per share, for FY 2002, compared to net sales of US$1,291.4m and net income of US$13.8m, or US$0.26 per share, in the prior year.
Adjusted EPS were US$0.91 for FY 2002, compared to US$0.95 for FY 2001. Adjusted net sales for FY 2002 were US$1,323.7m, compared to net sales of US$1,291.4m for last year. Adjusted net income was US$48.5m, compared to US$50.1m last year.
Outlook
For the FY 2003, the company expects top line growth of 2 to 4% and adjusted EPS of about US$0.92 to US$0.96, not including the anticipated impact of the merger of the Heinz businesses. Compared to the prior year, adjusted EPS are expected to reflect higher sales, partially offset by increased pension expense and a higher effective income tax rate. The company’s effective tax rate is expected to increase to approximately 39% in FY 2003. The company also expects lower interest expense as it continues to lower debt levels.
The company also expects the merger with the Heinz businesses to be accretive in the first full year after closing, but is not prepared to provide its impact on FY 2003 guidance at this time due to the uncertainty of the timing of the closing of the transaction.
