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Del Monte Profit Falls on Merger Costs
SAN FRANCISCO (Reuters) - Del Monte Foods Co. (NYSE:DLM - News), the largest U.S. processor of fruits and vegetables, on Tuesday reported a sharp drop in quarterly earnings because of costs associated with adding certain brands from H.J. Heinz Co. (NYSE:HNZ - News)

The company, which added Heinz's StarKist tuna, 9 Lives pet food and other brands late last year, said it earned $24.4 million, or 13 cents per share, in the third quarter ended Jan. 29. That compares with earnings of $45.7 million, or 29 cents per share, in the same period last year.

Results include the fruit, vegetable and tomato businesses, known as Del Monte Brands, only since Dec. 20, when the company merged the Heinz brands.

The company said its earnings were hurt by the inclusion of interest expense, increased inventory levels related to the merger, a higher tax rate and a loss on foreign exchange.

On an adjusted basis, Del Monte said it earned 26 cents per share. That figure excludes merger-related expenses and includes results of the Del Monte Brands for the full period as well as interest expense. It also assumes share dilution from the merger was effective for the full period.

Quarterly sales rose to $559.1 million from $437.8 million in the year-ago quarter.

"This is the first quarter reporting as the new Del Monte Foods," Richard Wolford, chairman and chief executive, said in a statement. "We believe we are off to a strong start."

Shares of Del Monte were up 23 cents, or 3 percent, at $7.84 on Tuesday morning on the New York Stock Exchange (News - Websites). (Additional reporting by Lauren Weber