In This Article:
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Inventory Reduction: Achieved a reduction of $312 million for the group, with US operations contributing $291 million.
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Days Inventory: Improved from 216 days to 174 days.
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Free Cash Flows: Generated $145 million compared to a $90 million outflow in the previous year.
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EBITDA Growth: Increased by 48%, or $36 million.
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Debt Reduction: Reduced from $2.5 billion to $2.38 billion, a $64 million reduction.
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Gross Margin: Decreased from 17.6% to 13.4% due to inflation and operational challenges.
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Excess Inventory: Reduced from 14.5 million cases to 8 million cases.
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Joyba Sales: Achieved $25 million in sales.
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Interest Expense Increase: US operations' interest expense increased by $17 million.
Release Date: March 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Del Monte Pacific Ltd (PHS:DELM) achieved a significant inventory reduction of $312 million, improving days inventory by 42 days.
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The company reported a substantial improvement in free cash flows, generating $145 million compared to a $90 million outflow in the previous year.
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Debt reduction efforts were successful, with a decrease of $104 million in external debt, aided by inventory management and free cash flow improvements.
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The sale of the Hanford plant generated $56 million in cash proceeds, contributing to future gross margin improvements through a co-pack arrangement.
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Del Monte Pacific Ltd (PHS:DELM) completed a strategic investment in Agro Tech Foods Limited, enhancing distribution capabilities in the Indian market.
Negative Points
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The company faces challenges with profit leaks due to waste, incremental trade, and sundry losses, impacting gross margins.
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Gross margin decreased from 17.6% to 13.4%, driven by inflation, under-absorption of overheads, and increased distribution costs.
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Excess inventory remains a concern, with 8 million cases still in excess, requiring further reduction efforts.
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Interest expenses increased by $17 million due to refinancing, adding financial pressure.
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Tariffs on products imported from China and Mexico, as well as increased costs of steel and tinplate, pose potential headwinds for pricing and demand.
Q & A Highlights
Q: How are you assessing the impact of tariffs on the US business? A: Greg Longstreet, President and CEO of Del Monte Foods Inc, explained that they are closely monitoring US tariffs, particularly on products imported from China and Mexico. They have already adjusted pricing to offset tariffs on mandarin products from China and red grapefruit from Mexico. Additionally, tariffs on steel and tinplate may lead to mid-single-digit price increases on metal packaging products.