UPDATE 4-Del Monte profit beats; shares jump
* Q1 EPS $0.30 versus Wall Street view $0.04
* Q1 revenue up 12 percent to $813.7 million
* Raises 2010 EPS forecast
* Shares up as much as 11 percent (Adds analyst comment, updates share price)
LOS ANGELES, Sept 3 (Reuters) - Del Monte Foods Co (DLM.N) on Thursday posted a quarterly profit that handily beat Wall Street estimates, leading it to raise its full-year outlook and sending its shares up as much as 11 percent.
The maker of Del Monte canned fruit, Meow Mix cat food and Pup-Peroni and Milk-Bone dog treats attributed the quarterly earnings beat to price increases it took last year to help recoup then-soaring commodity costs, as well as increases in sales volume of pet snacks.
"It's pretty exciting to see this company turn around after nine years of underperformance," said D.A. Davidson & Co analyst Timothy Ramey, who has a "buy" rating on Del Monte shares.
After hitting $11.50 -- the highest level since August 2007 -- Del Monte's stock was trading up 85 cents, or 8.2 percent, to $11.21 on the New York Stock Exchange late Thursday afternoon. The company went public in 1999 at $15 a share.
In addition to the higher-than-expected quarterly earnings, Chief Financial Officer David Myers said lower costs and interest expense contributed to the boosted 2010 outlook.
Del Monte, which also expects to substantially boost marketing spending this year, said it had earned $58.6 million, or 30 cents a share, in the first quarter that ended on Aug. 2, compared with a year-earlier loss of $10.1 million, or 5 cents a share.
Analysts on average were expecting a profit of 4 cents a share, according to Reuters Estimates.
Revenue rose 12 percent to $813.7 million, compared with analysts' estimates of $767.1 million. Net sales rose 4.7 percent in the consumer products segment and 20.3 percent in the pet products segment.
Year-over year, prices were up 15 percent across the board during the first quarter, Ramey said.
Morningstar analyst Ann Gilpin said Del Monte was late to the game when it came to raising prices to offset commodity costs. Profits improved during the first quarter, after pet food sales rose just over 20 percent and costs also fell.
Still, Gilpin said she does not expect margin expansion to be as strong for the entire year. Continued...
