Sustaining Growth

 

 

As a global branded food company, we bring to life health, wellness and nutrition, and sustain our people, the planet and our performance-the triple bottom line.

 
 
 
Growth SDG11
Company's fresh pack house, freezing and juicing plant in Bukidnon, Philippines
 

Del Monte Pacific Ltd. (DMPL) Group continued operating throughout the pandemic to address the demand for food while ensuring the safety of its workforce. The impact of DMPL extends beyond 5,900 regular employees, close to 3,100 seasonal employees in the US and about 20,200 service providers who work in different areas of our operations in the Philippines.

 

Del Monte Foods, Inc. (DMFI) is one of the largest producers, distributors, and marketers of premium quality, branded vegetables, fruits and tomatoes for the U.S. retail market. DMFI contracts with about 820 growers across the U.S. and Mexico, which supply about 912,000 tons of produce.

 

Our pineapple plantations in southern Philippines encompass two cities and 18 municipalities in Bukidnon and Misamis Oriental, Mindanao. Around 20,000 families or approximately 100,000 individuals directly or indirectly depend on the Company’s operations including fruit growers, harvesters, truckers, and maintenance crews.

 

The Company believes that our operations have immensely contributed to regional economic growth, creating a multiplier effect on the local economy by fueling businesses which support the Group, and serving the day-to-day needs of our employees and their families.

Our relationships with farmers extend to more than three generations. The fruits and vegetables are contractually grown on farms. Some Del Monte fruit growers include farm families that have produced for Del Monte for over 70 years. Our growth has a broader implication for farms across the U.S.

Our pineapple plantations in southern Philippines encompass two cities and 18 municipalities in Bukidnon and Misamis Oriental, Mindanao. Around 20,000 families or approximately 100,000 individuals directly or indirectly depend on the Company in the Philippines, including fruit growers, truckers, harvesters, and maintenance crews.

The Company believes that our operations have immensely contributed to regional economic growth, creating a multiplier effect on the local economy by fueling businesses which support the Group, and serving the day-to-day needs of our employees and their families.

 Economic Impact

 1. The Group generated a turnover of US$2.3 billion in FY22, 8% higher than prior year on better performance in USA, S&W fresh and packaged products.

 

  1. Improved sales mix with higher-margin retail branded products and selective price adjustments made to counter inflation.

 

  1. The Group’s EBITDA of US$351.5 million, up 14% from US$309 million, on higher sales and lower G&A.

 

  1. The Group’s net profit of US$100 million was higher by 58% than FY21.

 

  1. DMPL redeemed US$200 million of its DMPA1 Preference Shares in April 2022. This was refinanced by a combination of Senior Notes and loans.

 

  1. The Group will continue to improve and expand its offering of high quality nutritious products, and making these more readily available to consumers through traditional and digital channels including e-commerce, and through more convenient formats.

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Directors and management attending DMFI's innovation activity

  1. Amidst a high-cost environment, the Group remains vigilant in managing its costs. DMPL proactively addresses inflationary impact from commodity headwinds and increased transportation costs through revenue and cost drivers including driving efficiencies and productivity across operation.

 

  1. DMFI’s full year sales were US$1.7 billion or 70% of the Group’s turnover. Sales were up 12% driven by increases across all major segments following improvement in supply and distribution gains. Branded retail and foodservice sales were up 13% and 36%, respectively, offsetting the reduction of low-margin private label. New products contributed 5.3% to DMFI’s total sales.

 

  1. DMFI’s EBITDA rose 25% to US$213.6 million from US$170.5 million. Net profit tripled to US$54.3 million from US$15.1 million.
  2. DMFI successfully expanded into beverage and frozen new categories and accelerated growth in key sales channels of dollar stores, convenience stores, e-commerce and foodservice.

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DMFI Leadership Council with Gregory Longstreet, CEO

  1. DMFI won the “Product of the Year” award for the fourth straight year for its newest innovations: Del Monte Fruit Infusions in the fruit snack category and Joyba Bubble Tea in the coffee and tea category.

 

 

 

  1. Del Monte brand performed well in its traditional canned categories as consumers continue to reach for trusted brands and we continue to build momentum. Contadina and College Inn shares were flat to growing, after disproportionately benefitting from COVID-19 pantry loading last year.

 

  1. DMFI will strengthen its core business and expand its product portfolio to address consumers’ preference for health and wellness. The Company will improve its product availability through a more efficient supply chain, better distribution and expanded sales channels including e-commerce.

 

  1. DMFI achieved a credit rating upgrade to “B2” from “B3” from Moody’s and an upgrade to Positive Outlook from S&P. This reflects DMFI’s strengthening operating performance which improved liquidity and leverage.

 

  1. DMFI raised US$600 million through a 7-year Term Loan B facility at Adjusted SOFR, to primarily redeem the US$500 million Senior Secured Notes with a lower interest rate. The much lower interest rate will result in about US$20-30 million interest savings per year.

16. DMPL’s 2nd largest and most profitable subsidiary, Del Monte Philippines, achieved sales of US$729.5 million for full year FY22, up 3%. EBITDA of US$154.2 million increased by 1%, and net profit of US$97.7 million was up by 3%.

 

  1. Packaged fruit and spaghetti sauce category consumption was down due to shifting of consumer priorities in the face of inflation. Despite volume decline, we were able to increase packaged fruit market share from sustained marketing programs. In spaghetti sauce category, we lost share from low-priced brands.

 

  1. Sales of 100% pineapple juice declined as some consumers shifted to our multi-flavored line of juice drinks in single cans and 1-liter carton packs with growth of 54%.
  2. Foodservice sales rose 14% as we capitalized on the increased restaurant foot traffic.
  3. Innovation contributed 6.5% of total DMPI FY22 sales, including innovations consisting of Mr. Milk, Potato Crisp, Fruity Munchsters snacks, and the new Del Monte-Vinamilk dairy products.
  4. International market delivered growth led by S&W branded fresh pineapple, growing 18% driven by success in North Asia, especially China.
  5. S&W pineapple sales in China grew from expanded distribution coverage of existing distributors, plus new distributors which have supported the continued expansion into tier 2 and 3 cities.

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S&W pineapples exported to China

 

  1. S&W launched the naturally-ripened extra sweet S&W Deluxe Premium in China, Japan and South Korea with sustained favorable market feedback. This premium fresh variety is gaining traction in China’s retail segment.
  2. S&W’s high quality, premium MD2 fresh pineapple, makes the Company the largest fresh pineapple exporter to China with 53% volume share.
  3. E-commerce and digital marketing are growing with North Asia having the largest share of e-commerce pie. S&W is in most of the portals in China and South Korea.
 
 
 
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Mortenson Bros. Farms, Inc., one of Del Monte's growers

 
 

 

 

Responsible Sourcing Practices

The Group recognizes the importance of building a strong partnership with its suppliers. DMPL conducts business with its customers conforming to integrity, mutual interest, and fairness.

 

  1. The Group performs periodic audits of contract manufacturers and direct suppliers, including independent and unannounced audits to ensure quality assurance and compliance.

 

  1. The Group expects suppliers to comply with its Supplier Code of Conduct. This includes, but is not limited to, the rights of their workers and people working for their suppliers, as well as the communities affected by their operations, and those raising any human rights concerns associated with them.

 

  1. The Group also expects suppliers to comply and respect the fundamental labor rights set out in the 8th International Labor Organization core conventions. The Supplier Code of Conduct embodies the Group’s requirement on community and zero tolerance to reprisals, environmental compliance with national and international laws, anti-corruption and conflict of interest.

 

For details please refer to the policy at https://www.delmontepacific.com/hubfs/pdf/Supplier%20Code%20of%20Conduct.pdf

 

  1. DMFI’s relationships with farmers extend to more than three generations. The vegetables and fruits are contractually grown on farms. Some Del Monte fruit growers include farm families that have produced for Del Monte for over 70 years. Our growth has a broader implication for farms across the U.S.

 

 

 

  1. 99% of the vegetables, about 70% of the fruits, and 99% of the tomatoes the Company produces are grown in the U.S., while the balance are supplied from Mexico, Chile, Philippines, China, Thailand, and Greece.

 

 

 

  1. Del Monte in the US has a Supplier Diversity Program that enables small and diverse businesses to be considered fairly as subcontractors and suppliers.

 

  1. Close to 60% of DMPI’s suppliers are considered small and medium enterprises. These suppliers will undergo the supplier accreditation process of the Company and evaluated based on performance - quality, delivery, and competitiveness.

 

  1. DMPI has a Code of Business Conduct which outlines the Company’s practices in building its relationship with suppliers while adhering to the principles of integrity, mutual interest, and fairness in conducting business. 

 

  1. In selecting suppliers, DMPI applies its Supplier Quality Management Program to assess the quality and delivery performance, feedback, continuous improvement programs for all material suppliers and toll manufacturers.

 

  1. The objective of the program is to align DMPI’s quality parameters with that of suppliers, provide performance scorecards, classify suppliers into certified, preferred, approved, and conditional suppliers, and align them with DMPI’s goals that will support growth in the next five years. The program determines the allocation of the Company’s requirements to suppliers.

 

 

 

 

 

 

 
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Okray Family Farms, one of Del Monte Foods' long-term partners


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Worzella Farms, one of DMFI's growers