Del Monte Pacific sees higher earnings in 2011

By Neil Jerome C. Morales, BusinessWorld

Posted at Mar 02 2011 12:36 AM | Updated as of Mar 02 2011 10:50 AM

MANILA, Philippines - Robust local and export sales drove profits of Campos-led Del Monte Pacific Ltd. to $14.6 million in the fourth quarter, almost four times higher than the previous year’s earnings.

The latest figure allowed the agro-industrial firm to post a 40% growth in full-year earnings to $15.8 million.

Moving forward, the Singapore-listed firm expects a better performance this year amid higher output and increased production efficiency.

“Net profit for the fourth quarter surged to $14.6 million from $3.9 million in the same prior year period. Full-year 2010 net profit rose to $15.8 million, 40% higher than the $11.3 million earned in 2009,” the company said in a disclosure.

Sales climbed by a fifth to $139.2 million in the fourth quarter while full-year sales jumped by 15% to $378.6 million.

But the company incurred losses in joint venture FieldFresh India of $1.4 million in the fourth quarter, due to marketing investments, the company said.

“Revenue expansion coupled with a sales mix shift to higher margin products and businesses were the key drivers of our success,” said Joselito D. Campos, Jr., managing director and chief executive of Del Monte Pacific, in the disclosure.

“Although our cost and productivity programs have favorably impacted our results, we are even more encouraged by strong topline growth and improved sales mix,” Mr. Campos added.

In March, the company put up a plantation oversight committee to facilitate the streamlining of current procedures, and update methods and agricultural practices.

In the fourth quarter, Asia Pacific accounted for 68% of Del Monte Pacific’s sales, while 22% were attributed to Europe and North America and 10% to other countries. For the year, Asia Pacific took 68% of the business, followed by 22% for Europe and North America and 12% for other countries.

“Turnover growth in the Philippines was led by higher sales of processed fruits and culinary categories, which helped offset soft demand for Del Monte Fit ‘n Right juice drinks amidst market competition,” the company said.

The Del Monte Fit ‘n Right juice drink will be re-launched as a “low-calorie and no-added-sugar” product at reduced prices.

“Export sales to North America and Europe increased significantly versus prior year quarter driven by improved pineapple supply from the plantation and better prices for pineapple juice concentrate,” Del Monte Pacific said.

Pineapple yields improved after upgrades in agricultural processes.

Continued growth is expected this year as productivity and brand-building programs bear fruit. “We expect our growth to be sustained as we relentlessly continue business-building programs and active cost management,” Mr. Campos said.

“Barring unforeseen circumstances, we expect to deliver higher earnings in 2011, particularly in the second half, supported by higher pineapple production, better productivity and efficiencies, and stronger sales in the Philippines, Europe and fresh fruit business,” Mr. Campos added.

Del Monte Pacific produces, markets and distributes food, beverages, and related products in the Asia-Pacific region and the Indian subcontinent, and has supply deals with Del Monte trademark owners and licensees around the world.

The NutriAsia Group of Mr. Campos -- one of two firms short-listed in the failed bidding for a 49% stake in San Miguel Pure Foods Co. -- owns 78.7% of Del Monte Pacific. NutriAsia leads the Philippine market for condiments, specialty sauces and cooking oil. Its flagship brand UFC has an 85% market share in the ketchup and hot chili sauce categories.

Del Monte Pacific’s 20,000-hectare plantation in Mindanao is the world’s largest integrated pineapple operation, with a 700,000-metric-ton processing capacity.