What's pulling Del Monte Pacific's net profit down?

Sales of its US arm continues to slump.

Del Monte Pacific cannot just count on its main cash generating machine which is in the United States as sales of Del Monte Foods Inc. (DMFI) continues to slump. According to DBS Vickers Securities, the group's headline was dragged mainly by DMFI sales, which dropped 9.3% to US$492m.

The group acquired DMFI in 2012. The group's largest revenue contribution comes from the Americas, accounting for 78% of total revenue.

"The sales decline arose from slower inventory build-up by retailers and weakness in canned fruit and packaged vegetable segments. While gross margin for DMFI declined by 0.2ppt to 20.1% on sales mix, recurring operating margins improved from 7.9% to 8.5%," DBS said.

Del Monte Pacific has seen its bottomline crashing in its 2Q17 results, slumping to as much as 57.8% to US$20.2m from US$47.8m last year.

If it was not for its strong Asia Pacific sales, which saw a growth of 21% to US$141m, the group would have registered a lower net profit.

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