Del Monte Foods Second Quarter Results
Del Monte Foods today reported net sales for the second quarter fiscal 2010 of $958.9 million compared to $901.0 million last year, an increase of 6.4%. Income from continuing operations was $62.6 million, or $0.31 earnings per share from continuing operations (EPS), compared to $27.3 million, or $0.14 EPS in the previous year. Results for the second quarter fiscal 2010 include pretax costs of $17 million ($0.05 EPS) related to the Company's recently closed notes offering and tender offer.
"Our second quarter earnings reflect strong volume and pricing-driven topline growth, significantly improved margins and a second consecutive quarter of record earnings," said Richard G. Wolford, Chairman and CEO of Del Monte Foods. "These results are a reflection of the momentum generated through the successful execution of our Accelerated Growth Plan. This strategy is targeted to increase marketing investment behind our core brands and to offset costs through pricing actions and productivity initiatives. In the second quarter, we successfully executed against these strategic objectives, including increasing our marketing investment by over 30% and generating $20 million in productivity savings. As we enter the holiday season, we are pleased with the early look at our developing merchandising initiatives and the execution of our promotional and pricing strategy. Based on the strong first half performance and lower expected full year costs, we are increasing our EPS target range for fiscal 2010. We are also increasing our long term operating margin expectations as we view fiscal 2010 as a new base for Del Monte from which we will continue to execute against our Accelerated Growth Plan to drive long-term value for our shareholders."
The 6.4% increase in net sales for the quarter reflects strong topline growth driven primarily by strong unit volume gains from existing products in Consumer Products, as well as the benefit of fiscal 2009 pricing actions partially offset by the impact of elasticity (the volume decline associated with price increases). New product volume growth (primarily in Consumer Products) also benefited the topline.
