Del Monte Foods 3Q Net Down 67% Due to Margin Pressures and Debt Costs

The maker of pet foods and food pantry staples was acquired last March by an investor group led by funds affiliated with Kohlberg Kravis Roberts & Co. LP, Vestar Capital Partners and Centerview Capital LP. For the quarter ended Jan. 29, Del Monte Foods reported a profit of $28.6 million, down from $87.1 million a year earlier. The latest period included $62.8 million in interest expense, up from $18.8 million a year earlier.

March 13 2012 --- Del Monte Foods Co.'s fiscal third-quarter earnings slumped 67% as higher input costs pressured margins, the company also faced higher debt costs in the wake of its takeover last year.

The maker of pet foods and food pantry staples was acquired last March by an investor group led by funds affiliated with Kohlberg Kravis Roberts & Co. LP, Vestar Capital Partners and Centerview Capital LP.

For the quarter ended Jan. 29, Del Monte Foods reported a profit of $28.6 million, down from $87.1 million a year earlier. The latest period included $62.8 million in interest expense, up from $18.8 million a year earlier.

Sales for the quarter were about flat at $971.1 million. Sales in the pet products business were up 4.4% to $478.8 million, helped by volume growth in new products. The consumer products business posted a 3.6% sales decline to $492.3 million, primarily due to lighter volume in existing products.

“Consumer sentiment and macroeconomic factors continue to challenge the operating environment for both Del Monte Foods and the industry,” said Dave West, CEO of Del Monte Foods. “Amidst this difficult environment, new Pet Product items such as Kibbles ‘n Bits Bistro Meals and Milo’s Kitchen dog snacks performed strongly, and we continued to invest in building new go-to-market capabilities, enabling the Company’s future growth. We are launching seven additional new Pet Products through the balance of the fiscal year, including Meow Mix Tender Centers and Meow Mix Paté Toppers. We also had solid in-market execution leading to share gains in Vegetable during the critical holiday season.”