Del Monte Foods income drops 44% in quarter

by Staff
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SAN FRANCISCO — Despite increased fruit sales, increased costs of fish, grains, fats and oils are factoring into financial results for Del Monte Foods Co.

For the first quarter ended July 29, net income for Del Monte Foods was $3.5 million, equal to 2c per share on the common stock, down 44% from $6.2 million, equal to 3c per share, during the same quarter of the previous year.

Net sales were $753.5 million, down 12% from $674.1 million during the same quarter of 2006.

"I am pleased with the company’s quarterly top-line performance driven by last year’s pet acquisitions, new products and base business growth, primarily in fruit, resulting from strong marketplace performance," said Richard G. Wolford, chairman and chief executive officer. "However, cost increases facing our business continue to be a challenge, particularly in fish, as well as in grains, fats and oils due to increased demand for alternative fuels. Combating these cost increases remains a critical priority. We remain focused on our strategic tenets — including optimizing an improved portfolio and executing transformation initiatives and cost reduction programs — as we work to offset cost pressures and continue to strengthen our brands in the marketplace."

Operating income for the consumer products segment decreased 46% to $13.9 million, which compared with $25.8 million during the same quarter of 2006. The decline was caused by the absence of prior-year gain on the sales of the S&W beans perpetual license. The company also had higher inflationary and other operational costs.

Net sales for the consumer products segment were $444.6 million, which was up 6% from sales of $420.6 million during the same quarter of 2006. The increase in sales was a result of increased fruit sales. However, StarKist seafood sales were lower mainly due to lower albacore sales.

During the second quarter, the company anticipates sales growth of about 7% to 9% over sales of $893.5 million during the second quarter of fiscal 2007. For fiscal 2008, the company expects earnings per share from continuing operations to be at the low end of its 70c to 74c guidance as a result of higher projected fish costs and higher costs for grains, fats and oils.

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