CHICAGO Del Monte Foods Co DLM.N posted a far higher-than-expected quarterly profit, helped by price increases, volume growth and cost cuts, and offered a strong fiscal-year forecast, sending its shares up 9.3 percent.
The maker of Meow Mix pet food and Del Monte canned fruits and vegetables said on Thursday that net income jumped 42 percent to $71.5 million, or 36 cents a share, in the fiscal fourth quarter, ended May 3, from $50.4 million, or 25 cents a share, a year earlier.
Earnings from continuing operations were 35 cents a share, easily topping the 26 cents that analysts polled by Reuters Estimates had expected.
Del Monte, like many food producers, has benefited from price increases imposed over the past year as commodity costs have soared.
Morningstar analyst Ann Gilpin called the results "unbelievable" but questioned the sustainability of the volume gains, given the higher prices.
"Everybody's doing the same thing, and I think maybe they just got lucky in the quarter," she said.
"I just don't think that this is something to write home about, and I don't really view this as a sign of things to come," Gilpin added. "It's more of a really good quarter ... but they're not out of the woods yet."
Del Monte's quarterly sales rose almost 21 percent to $1.06 billion, topping the $950.7 million analysts had expected.
"The company's strong financial results were delivered by both consumer and pet businesses," Chief Executive Richard Wolford told analysts on a conference call.
He cited increased marketing by the company and a rise in sales volumes. While Del Monte's fruit sales slumped due to increased competition, that was more than offset as the vegetable and tomato categories benefited from people eating more meals at home amid the recession.
For fiscal 2010, Del Monte forecast earnings from continuing operations of 76 cents to 80 cents a share. Analysts were expecting 75 cents.
The company sees 2010 sales growth of 4 percent to 6 percent over 2009's $3.63 billion. Analysts were expecting a rise of less than 1 percent, to $3.66 billion.
The company added that within the next 12 months it will seek to refinance some or all of its debt, particularly under its senior credit facility, and that could change the 2010 forecast.
Del Monte shares rose 71 cents, or 9.3 percent, to $8.36 in early-afternoon trading on the New York Stock Exchange.
(Additional reporting by Ian Sherr in Chicago; Editing by Lisa Von Ahn)