Del Monte Foods posts marginal decline in Q3 profit

Del Monte Foods, a US-based food production and distribution company, has reported a 1.06% decline in Q3 2013 net income to $28.3m, compared with $28.6m in the corresponding quarter last year.

The company attributed the decrease in the quarter’s income to increased advertising investment and higher ingredient costs.

Operating income for the quarter also dropped by 12.5% to $108.9m from $124.5m in Q3 2012.

However, net sales for the three-month period ended 27 January 2013 totalled $1.02bn, an increase of 5.9% compared to $971.1m in the third quarter of fiscal 2012.

Del Monte Foods CEO Dave West said that strong price realisation and new product innovation have fuelled the company’s growth, as sales in both the consumer and pet divisions increased.

"In Consumer, we began national advertising behind the Del Monte brand, fuelling this investment with planned lower trade spending," West said.

"I am optimistic that these investments and initiatives will drive long-term success in the marketplace," he added.

Segment-wise, the company’s consumer products division, which sells vegetable, fruit, tomato and snack products, reported a 1.8% rise in its net sales to $501.2m in Q3 2013, compared to $492.3m in the same month a year ago, driven by planned lower trade spending.

The segment’s operating income fell from $40.8m in Q3 2012 to $32.3m in Q3 2013, a decline of 20.8%.

For the nine months ended 27 January 2013, Del Monte Foods’ net income increased to $64.2m, compared to $18.2m in the same period last year.

The company’s net sales for the nine-month period of 2013 were $2.85bn, an increase from $2.74bn in the corresponding nine-month period of fiscal 2012.

In 2011, Del Monte Foods was acquired by an investor group led by funds affiliated with Kohlberg Kravis Roberts, Vestar Capital Partners and Centerview Capital.