Del Monte

Del Monte: Posted 1Q13 results which was below street estimates. Rev at US$87.4m +17% y/y and -43% q/q, while net profit at US$4.5m, +2% y/y and -7% q/q . Gross margins at 22.6% vs 23.6% yoy. Del Monte attributed the increase in sales to stronger performance of its branded business in the Philippines and improved sales in the fresh market. Sales of its processed fruit, culinary and canned beverage segments in the Philippines continues to be strong, with growth coming in at 34%. The co attributed this to both the buoyant Philippine economy and its aggressive advertising efforts there. Rev from Del Monte's S&W branded fresh business also increased by 20% y/y driven primarily by robust sales in Japan, the Middle East and Singapore. Bottom-line was however weighed by an increase in warehousing costs as a result of high inventory from weak export sales. Barring unforeseen circumstances, the Group expects to improve earnings in 2013 driven by the branded business, although cites challenges in the export markets with low PJC prices and weak demand, where the Group is actively addressing this by cutting back on tonnage, shifting volume to stronger markets and growing sales of more value-added products Aims to implement operational efficiencies, procurement savings and active cost management and shift revenue mix over a period of time towards more branded sales to deliver higher margins and more sustainable profits.