Del Monte Foods reported net sales for the fourth quarter fiscal 2013 of $960.4 million compared to $934.6 million for the fourth quarter fiscal 2012, an increase of 2.8 percent. The increase was primarily driven by list pricing actions net of trade spend and growth in new product sales, partially offset by volume declines for existing products, including pricing elasticity.
Operating income increased from $89.3 million in the prior year period to $124.6 million. The drivers of the increase in operating income are similar to the drivers of the net sales increase noted above. In addition, the prior year period was impacted by unusual litigation costs which did not recur in the current year. List pricing actions net of trade spend and productivity savings more than covered operational cost increases, benefitting operating income.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 8.7 percent to $151.5 million compared to $166.0 million in the prior year. As compared to operating income, Adjusted EBITDA does not include unusual litigation costs. In addition, adjusted EBITDA was negatively impacted by the cash impact of hedge positions and higher general and administrative expenses. In calculating adjusted EBITDA, the adjustment for the cash impact of hedge positions is calculated pursuant to the company’s 7.625 percent notes indenture and credit agreements.
“Our fourth quarter results reflect strong topline and margin performance in Pet Products driven by price realization,” said Dave West, CEO of Del Monte Foods in a prepared statement. “For the full year, we are pleased with sales growth of about 4 percent driven by growth in both segments, with especially strong growth of nearly 7 percent in Pet Products. The revitalization of our iconic Del Monte brand continues in the consumer products segment. New advertising, packaging, product reformulations and refreshed pricing and promotion strategies are among the efforts deployed to recharge this 100-plus year old brand. Strong margins driven by price realization, coupled with moderating cost inflation and productivity savings, have allowed us to increase marketing investment to fuel future growth in both segments of our business. I am confident that the marketing investments and other go-to-market initiatives will pay off with long-term success in the marketplace.”
