Del Monte posts strong profit, shares rise

By Ben Klayman

CHICAGO (Reuters) - 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.