Rising Costs Cause Disappointing Quarter at Del Monte

Shares of Del Monte Foods fell Thursday after the company reported lower-than-expected fiscal second-quarter profits and cut its full-year outlook. For the quarter, the maker of canned vegetables, cat food, and StarKist Tuna said profits were $25.9 million ($0.13/share) compared to $23.2 million ($0.11/share) a year ago. Excluding restructuring costs, the company earned $0.14/share, failing to meet analysts' estimates of $0.17/share. Sales increased 5% to $938.1 million, also falling short of estimates of $960.2 million. CEO Richard G. Wolford said Del Monte "continued to be pressured by aggressive cost increases, primarily in raw products, due to increased demand for alternative fuels and challenging fishing conditions. Looking forward, this severe industry-wide cost environment is expected to continue with costs increasing at rates greater than originally anticipated." As a result, the company lowered its earnings targets for the year to a range of $0.64-$0.68/share from $0.70-$0.74/share. Shares of Del Monte traded down 6.1% to $9.13 in midday trading Thursday.

Sources: Press release, RTT News
Commentary: Has Anything Really Changed in the Last Two Days?
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