Del Monte Foods net falls 2% despite spike in sales

by Eric Schroeder
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SAN FRANCISCO — Net income at Del Monte Foods Co. eased 2% in the third quarter ended Jan. 31, falling to $59,400,000, equal to 29c per share on the common stock, from $60,500,000, or 30c per share, in the same period a year ago. Net sales rose 8% to $1,013,200,000.

For the Consumer Products segment, operating income was $69,300,000, up narrowly from $69,000,000 in the third quarter of fiscal 2009. Net sales in the segment were $544,400,000, up 7% from $509,300,000. Del Monte said the gain reflected strong unit volume growth from existing products, primarily vegetables and fruits. Sales also benefited from the launch of Del Monte Fruit Chillers and No Salt Added vegetable products.

“Our brands are performing well across the portfolio, driving volume gains and share improvements,” said Richard G. Wolford, chairman and chief executive officer of Del Monte Foods. “We have nearly doubled our marketing investment this quarter versus the prior year to strengthen our key equities. Our investment in our brands, which is focused in the second half of fiscal 2010, will provide momentum as we enter fiscal 2011.

“Our productivity initiative is on target to produce $80 million in savings for the fiscal year as we generated $24 million in productivity savings in the third quarter.”

In the nine months ended Jan. 31, net income was $180,600,000, or 90c per share, up 79% from $100,800,000, or 40c per share, in the same period a year ago. Net sales totaled $2,785,800,000, up 8% from $2,569,500,000.

Del Monte raised its fiscal 2010 earnings-per-share guidance from continuing operations to $1.07 to $1.11 from an earlier forecast of 93c to 97c. The company also said it now expects cash provided by operating activities, less cash used in investing activities, to total between $225 million and $235 million, up from earlier expectations of $195 million to $205 million.
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