Singapore Mainboard and Philippine Stock Exchange dual listed Del Monte Pacific Limited reported its fourth quarter FY2019 results ending April.
The Group generated fourth quarter sales of US$432.6 million, 13% lower than the prior year quarter mainly due to the divestiture of the Sager Creek vegetable business, lower sales in the USA and the Philippines, partly offset by higher sales of the S&W business in Asia.
DMFI contributed US$308.3 million or 71% of Group sales. Sales declined by 19% mainly due to the divested Sager Creek business, lower branded volume as a result of price increase, and reduced sales of low-margin non-branded business in line with strategy. EBITDA margin without one-off items improved by 4 ppts versus the prior year quarter. Del Monte continues to diversify beyond the canned goods aisle, a declining category, and introduced four new innovative products in the growing categories of refrigerated produce and frozen to cater to demand for health and wellness, snacking and convenience.
In February, DMFI launched the new Del Monte Citrus Bowls in the refrigerated produce section. These are grapefruit and citrus salad in 100% juice with a longer shelf life than fresh cut fruit, and without any preservatives. Another innovative product, Del Monte Fruit Crunch Parfaits, which feature layers of nondairy coconut crème, crunchy granola with probiotics, and a full serving of fruit, was introduced. In the frozen segment, DMFI introduced Del Monte Veggieful Bites and Contadina Pizzettas, frozen snacks made with cauliflower crust, with a full serving of vegetable in five bites.
“With Veggieful Bites, we set out to create a healthy snack with vegetables as the primary ingredient,” said Del Monte Foods CEO Gregory Longstreet. “In fact,” he adds, “we are the only brand in the frozen snack space that can list vegetables as the largest ingredient in the recipe, with veggies in the filling and the dough. This meets consumers’ desire for quick, convenient, delicious snacks that are wholesome and nutritious.”
The Group reported an EBITDA of US$38.8 million, significantly higher than the prior year quarter’s EBITDA of US$6.4 million. Without the one-off expenses related mainly to plant closures in the USA, the Group’s recurring EBITDA would have been US$43.3 million, better than the prior year quarter’s EBITDA of US$34.9 million.
The Group reported a net income of US$6.3 million, much higher than US$4.0 million in the prior year quarter. Excluding one-off items, the Group would have registered a recurring net income of US$9.2 million, a turnaround from the net loss of US$2.9 million in the prior year period.
Full Year
The Group generated sales of US$2.0 billion, down 11% versus the same period last year mainly due to the divestiture of Sager Creek and lower sales in the USA. The Group reported an EBITDA of US$143.7 million, higher by 40%, and a net income of US$20.3 million, a turnaround from the US$36.5 million loss last year. Without one-off items, recurring EBITDA would have been US$156.1 million and net income US$15.8 million, versus prior year’s US$165.0 million and US$12.0 million, respectively.
DMPL CEO Joselito Campos, Jr said, “We are encouraged by the accelerated pace of innovation and new product launches especially in the United States, taking us into new categories and formats outside the can which is not growing.” He added, “At the same time, we have proactively reduced costs within our control amidst headwinds of rising tin prices. We are pleased to deliver a full year net income for DMPL, driven by our results in Asia, while we invest in transforming our US business.”
Strengthening Balance Sheet
The Group’s gearing improved to 2.4x equity as of 30 April 2019, from 2.5x in 31 January 2019, due to a reduction in inventory in DMFI. In the fourth quarter of FY2019, the Group purchased an additional US$6.5 million of DMFI loans from the secondary market, bringing the total purchased loans to US$231.4 million out of US$260 million. This is the highest interest-bearing loan of the Group. For FY2019, interest savings realised amounted to over US$10 million.