Del Monte shares sizzle on local unit's impressive bottom line

MANILA, Philippines — Food manufacturer Del Monte Philippines Inc. managed to weather the coronavirus storm, thanks to robust sales amid high demand from locked-down consumers and lower expenses.

The company best known for its tomato and pineapple offerings netted P4.6 billion in fiscal year 2021 ending April, up 33% year-on-year, its listed parent firm, Del Monte Pacific Ltd., told the stock exchange on Tuesday.

Investors seemed happy with the financial results. On Tuesday, shares in Del Monte Pacific rallied 6.62% to close at P15.78 each.

Much of the lift came from 8% annual increase in sales to P34.5 billion, close to two-thirds of which was generated onshore while the rest was from international markets, figures showed.

“During FY2021, we focused on adapting to consumer trends through product innovation and digital marketing, while, at the same time, strengthening our operations and maximizing efficiencies,” Joselito Campos Jr., company chief executive, said.

“These initiatives translated into sales growth in both our Philippines and international markets,” Campos added.

Broken down, local sales grew 10% year-on-year to P19.2 billion due to surge in demand from consumers stocking up on food items like packaged fruit products, spaghetti sauce, pasta and ketchup to reduce trips to supermarkets amid contagion fears.

The increase in at-home consumption as a result of state-initiated lockdowns likewise boosted Del Monte Philippines’ export sales. Specifically, sales of the company’s packaged fruit and beverages products surged 15% on-year, with the US being the “main driver of sales.”

Overall, gross margin jumped 30% on-year on “higher sales volume, favorable mix, lower costs and expenses, and greater efficiency” while gross profit expanded 21.5% from year-ago level to P10.4 billion. A strong peso that made imports cheaper helped the company reduce costs for pineapple, as well as raw and packaging materials. Del Monte Philippines also paid lower royalty expense and had fewer wastage.

With its generally healthy balance sheet, Del Monte Philippines announced last April it was reviving its plan to go public in a bid to raise over P44 billion. It was a plan that dated back three years ago, but was pushed back after a weak peso at the time battered the local stock market. 

Excluding other charges and fees, net proceeds from the upcoming initial public offering will be at P36.98 billion, which will be mainly used by Del Monte Philippines’ parent firm to pay old debts.