Del Monte Foods net, sales rise behind pricing actions

by Eric Schroeder
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SAN FRANCISCO — Pricing actions and new product volume helped drive earnings and sales growth at Del Monte Foods Co. in the second quarter. Net income in the quarter ended Oct. 26 totaled $50.4 million, equal to 25c per share on the common stock, up 95% from $25.9 million, or 13c per share, in the same period a year ago.

Sales for the quarter were $901 million, up 11% from $808.2 million during the same quarter of the previous year.

"I am pleased with the company’s quarterly performance, particularly the continued strength of our topline," said Richard G. Wolford, chairman and chief executive officer. Net sales growth reflects the fact that we are seeing the increased benefit from our pricing actions, which importantly, together with productivity actions, offset continued cost increases in the second quarter."

During the second quarter, the Consumer Products segment had an operating income of $45.8 million, up 4% from $43.9 million during the same quarter of the previous year. Sales in the segment were $491.9 million, up 6% from $463.6 million during the same quarter of the previous year.

The company said fiscal 2009 earnings should come in toward the midpoint of a range of 58c to 62c per share, rather than toward the lower end as it previously expected.

Del Monte said it expected fiscal 2009 net sales to rise 8% to 10%, up from a prior forecast of 6% to 8% growth.

"In fiscal 2009, we are making the investments to unleash the power of our core brands and drive our Pet and Packaged Produce growth engines," Mr. Wolford said. "We believe this strategy will deliver our fiscal 2009 goals and drive future e.p.s. growth. Importantly, our execution against increased marketing investment and leveraging a more marketing-centric organization are key to driving our success."

For the six months ended Oct. 26, Del Monte Foods posted net income of $40.3 million, or 20c per share, up 37% from $29.4 million, or 14c per share. Net sales were $1,627.2 million, up 13% from $1,435 million in the same period a year ago.

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