Del Monte Profit Falls; Sales Rise

Del Monte Foods Co., the largest U.S. maker of canned fruits and vegetables, said Thursday that fiscal third-quarter net income fell 9.3% and fiscal fourth-quarter profit would decline because of higher transportation and tuna costs.

Profit in the period ended Jan. 30 fell to $48.5 million, or 23 cents a share, the San Francisco-based company said. Sales rose 6.2% to $861.3 million. Fourth-quarter earnings will be no more than 23 cents a share, down from 27 cents a year earlier.

Del Monte had net income of $53.5 million, or 25 cents, on sales of $811.1 million in the third quarter a year earlier. It was expected to earn 24 cents a share, the average forecast of nine analysts surveyed by Thomson First Call.

Del Monte’s expenses rose because of an increase in the cost of steel used in cans and of trucking and fuel. Fish prices at its StarKist tuna unit are near a 15-year high, Chief Executive Richard Wolford said.

“We have to work our way through a very difficult cost environment we don’t see changing for the next 12 to 18 months,” Wolford said.

Shares of Del Monte rose 21 cents to $11.03 on the New York Stock Exchange.

Del Monte is trying to cut costs by choosing to ship more by train instead of trucks, and loading more on trucks when they are used, Wolford said. Transportation and warehouse expenses have risen as much as 12% in the last year.

Sales of consumer products, which include Del Monte-brand green beans, increased 4.8% to $638.3 million.