Branded food and pet products maker Del Monte Foods Co. (DLM) on Thursday reported a profit for the first quarter, compared to a loss last year, helped by a 12% increase in sales, owing to pricing actions as well as solid base unit volume gains, and a reduction in expenses. Prompted by the excellent performance, the company lifted its outlook for earnings per share from continuing operation in fiscal 2010.
The San Francisco, California-based company's first-quarter net income was $58.6 million or $0.29 per share, compared to a loss of $10.1 million or $0.05 per share reported in the prior year period.
Income from continuing operations was $58.9 million or $0.30 per share, compared to a loss from continuing operations of $8 million or $0.04 per share reported a year ago. On average, seven analysts polled by Thomson Reuters expected earnings per share of $0.04 for the quarter. Analysts' estimates typically exclude special items.
First-quarter net sales grew to $813.7 million from $726.2 million in the same period last year. Analysts were looking for revenues of $771.98 million.
The company added that solid base unit volume gains, primarily in Pet Products, and new product volume growth across both Consumer Products and Pet Products also benefited the top line.Net sales from Consumer products rose to $401.4 million from $383.5 million in the prior year. Apart from pricing actions, growth in new product volume behind Del Monte Fruit Chillers Tubes and Packaged Produce new items also contributed positively to net sales.
Pet Products segment generated $412.3 million in the latest quarter, sharply higher than $342.7 million reported in the prior year, driven by strong base unit volume growth, particularly in Pet Snacks, and the benefit of fiscal 2009 pricing actions.
Cost of products sold dropped to $553.8 million from $566.8 million in the previous year. Selling, general and administrative expense dipped to $139 million from $146.1 million in the prior year.
For the previous quarter, the company's net income increased to $71.5 million or $0.36 per share from $50.4 million or $0.25 per share in the prior-year quarter. Fourth-quarter net sales grew 20.7% to $1.06 billion from the previous year's $875.8 million, reflecting pricing actions as well as volume growth.
Among others in the industry, J.M. Smucker Co. (SJM) reported last month that its first-quarter profit more than doubled from last year, driven by strong double-digit sales growth. First-quarter net income jumped to $98.06 million from $42.29 million reported last year, while quarterly earnings per share rose to $0.83 from prior year's $0.77. Net sales grew 58% to $1.05 billion from $663.66 million in the prior year quarter.
Looking ahead to fiscal 2010, Del Monte raised its outlook for earnings per share from continuing operations to $0.88 to $0.92 from its earlier range of $0.76-$0.80. Analysts expect fiscal 2010 earnings per share in the range of $0.78-$0.85.
In addition, the company said it is maintaining its fiscal 2010 net sales growth target of 4% to 6%, over fiscal 2009 net sales of $3.627 billion, reflecting balanced growth across the Consumer and Pet businesses. Analysts estimate revenues of $3.79 billion for the quarter.
The company said it expects marketing spending to increase 40%-50% above fiscal 2009 levels, compared to prior expectations of 30%-40%.
Commenting on the results, Richard Wolford, Chairman and CEO of Del Monte Foods, said, "These results reflect the successful execution of our Accelerated Growth Plan strategy, including fiscal 2009 pricing actions that recouped some of the inflationary cost-driven margin contraction experienced over the past few years, productivity initiatives to drive costs out of our business, and increased investment in our core brands and growth engines to drive margins and expand beyond our current categories.''
DLM is currently trading at $11.15, up $0.79 or 7.63%, on 711,463 shares.
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