CANNED-FOOD brand Del Monte Pacific : D03 0% on Thursday (Mar 9) posted a net profit of US$9.8 million for the quarter ended Jan 31, down 62 per cent from the US$25.9 million it posted over the same period a year earlier.

This came despite turnover increasing by 3.3 per cent to US$681.2 million, from US$659.4 million the year before.

The group attributed the decline in net profit to lower operating results and increased interest expense from higher bank loans, with the redemption of preference shares.

Notably, Del Monte’s net debt for the quarter rose 50.9 per cent to US$2.2 billion, giving the group a gearing of 582.5 per cent.

In the third quarter, sales in the group’s US subsidiary, Del Monte Foods (DMF), rose by 5.8 per cent to US$495.7 million.

This came on the back of higher retail-branded sales of canned vegetables, canned fruit and tomatoes, as well as from incremental sales from its recently acquired Kitchen Basics ready-to-use stock and broth business.

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DMF’s gross profit improved by 1.1 per cent to US$98.8 million, but gross margin fell 93 basis points to 19.9 per cent.

The company attributed this to higher conversion and logistics costs as a result of inflationary pressures, which more than offset its pricing adjustments to address inflation.

Excluding DMF, the rest of the group’s business recorded a lower gross margin – 26.1 per cent from 32.5 per cent the year before. Del Monte cited commodity headwinds, which drove up costs in areas such as raw materials, packaging, farm inputs and fuel.

“This was further aggravated by the negative impact of the (Filipino) peso devaluation on all imported products, including local sales,” the group said.

As for the nine months ended Jan 31, the group’s net profit fell 64 per cent to US$28.9 million; turnover rose 3.6 per cent to US$1.8 billion.

No dividend was declared for the quarter and the corresponding period the year before. The group generally declares dividends based on full-year results.

Shares of Del Monte closed flat at S$0.315 before the results were released.