Del Monte Corporation (DMC) Q3 2026 earnings review
Del Monte's canned foods grow fast, but bananas lose money
Del Monte, the global seller of fresh produce and canned foods, leaned on its new packaged-goods acquisition while its original fruit business shrank. Total sales excluding last year's sold vegetable unit rose 14%, and chief executive Mohammad Abu-Ghazaleh said the acquired Prepared Foods business brought higher margins and better balance. Even so, profit per share excluding one-offs fell 28% because bananas lost money and acquisition debt raised interest costs.
| Sales outside Prepared Foods, excluding Mann Packing | -7.1% from a year ago (by our math) |
|---|---|
| Total sales, excluding Mann Packing | $1,095.3M +14.2% from a year ago |
| Profit per share, excluding one-offs | $0.50 -27.5% from a year ago |
| Quarterly dividend outlook | Unchanged $0.30 per share for Q4 |
โ๏ธ Verdict: ๐ด Bearish
The story got worse because the banana business swung to a gross loss and sales across the rest of the fresh produce business dropped 7% by our math. Heavy rain and crop disease in Costa Rica cost an extra $6 million, pushing the banana margin below zero despite recent farm closures. The good news: Prepared Foods delivered a 17.5% gross margin and generated nearly half of total gross profit.
The question now is whether holiday canned-food sales can offset the fresh-fruit slump and turn the seasonal inventory buildup into cash. If Prepared Foods hits its fourth-quarter peak, debt will fall and full-year targets can hold; if fresh produce keeps slipping, the annual profit plan is at risk. The conference call outlook and fourth-quarter cash flow will decide it.
๐ Bull Case
Prepared Foods Now Carries Nearly Half of Profit
Del Monte bought the canned and packaged goods business Del Monte Foods in March 2026 to reunite the brand and reduce its reliance on fresh fruit. Chief executive Mohammad Abu-Ghazaleh said the acquired unit is already "adding scale, attractive margins and greater balance to our earnings profile".
- Prepared Foods sales: $261.2 million, up from $61.5 million a year ago
- Segment gross profit: $45.8 million, or 45% of the company total
- Segment gross margin: 17.5%, up from 6.5% a year ago
- Company gross margin: 9.4%, up 1.5 percentage points from a year ago
The numbers back up his claim on product mix, because Prepared Foods earned nearly double the company's average gross margin. That lift raised total gross profit by 27% to $102.6 million even though profits in the fresh produce segments fell. The company also introduced six new products under the reunited brand at an ะพะบััะฑัั trade show.
What to watch: standalone sales for Del Monte Foods in the quarterly filing, against the $625 million full-year target set last quarter. A strong fourth quarter is normal for canned goods and would confirm the acquisition is meeting its plan.
Shipping Disruptions Eased and Cargo Sales Grew
Earlier this year, conflict in the Middle East and shipping delays through the Strait of Hormuz damaged fresh produce in transit and drove up freight costs. Management worked to manage these external cost pressures through price increases in North America and through its own shipping operations.
In the third quarter, customer quality claims and inventory write-offs from Middle East shipping delays dropped to zero, after costing $2.3 million in the first half of the year. Meanwhile, Other Products and Services, which includes third-party ocean freight, grew sales 11.4% to $59.5 million and lifted gross margin to 15.1% on stronger commercial cargo activity.
What to watch: management's update on theconference call to its $45 million to $55 million full-year external cost estimate. Holding or lowering that range would show that fuel and shipping headwinds remain contained.
๐ป Bear Case
Bananas Swung to a Gross Loss on Disease
Bananas make up 29% of Del Monte's sales, and management targeted a 3% to 4% full-year gross margin for the segment as it closed high-cost farms. Abu-Ghazaleh said the fresh business is holding up while it "navigates volume, currency and cost pressures".
Instead, the banana segment lost money before overhead costs. Sales fell 12.5% to $313.3 million on "increased competition and supply constraints in the Middle East", and the segment posted a $2.7 million gross loss (-0.9% gross margin), down from a $4.6 million gross profit a year ago. Heavy El Niรฑo rains in Costa Rica forced Del Monte to spend an extra $6.1 million on "Black Sigatoka prevention efforts", while a stronger Costa Rican colรณn and higher ocean freight costs added further pressure.
This cuts against the turnaround plan because nine-month banana gross margin is now down to 2.2%, well below the 3% to 4% full-year target. Even without the $6.1 million leaf-disease cost, by our math the banana gross margin would have been just 1.1%.
What to watch: fourth-quarter banana gross margin, which needs to exceed 6% by our math for the segment to reach the bottom of its 3% to 4% full-year target. Another weak reading would show that crop disease and currency costs are outrunning the farm closures.
Sales Outside Prepared Foods Kept Shrinking
Del Monte sold its Mann Packing vegetable business late last year and bought Del Monte Foods in March. Including the new acquisition and stripping out Mann Packing from last year's base, total sales excluding one-offs grew 14.2% to $1,095.3 million.
Outside the Prepared Foods segment, however, the rest of the business shrank 7.1% from a year ago by our math, a worse drop than the 6.3% decline in the second quarter. Fresh and Value-Added Products, which sells pineapples, avocados, and fresh-cut fruit, saw sales excluding Mann Packing fall 5.2% to $461.3 million on lower avocado and fresh-cut fruit volumes. Its gross margin excluding one-offs fell 3.9 percentage points to 10.9% on higher pineapple and fresh-cut production and distribution costs.
What to watch: standalone Del Monte Foods revenue in the quarterly filing, which will show how much of the Prepared Foods segment came from the acquisition. If legacy sales keep falling, the company will struggle to meet its 13% to 15% full-year sales growth target.
Inventory Build Turned Cash Flow Negative
Acquiring a canned food business requires funding a large seasonal build of cans and produce during the summer harvest. Del Monte generated $53.1 million in operating cash flow over the first nine months of 2026, down from $234.2 million in the same period last year.
Because operating cash flow was $94.0 million through the first six months, by our math the company burned $40.9 million of operating cash in the third quarter alone. Inventories rose to $849.6 million, up $128.2 million in the quarter and $267.7 million since the end of 2025. To fund the "financing of the Del Monte Foods acquisition and inventory buildup", long-term debt and finance leases climbed to $492.6 million from $176.2 million at year-end.
What to watch: fourth-quarter inventory and operating cash flow as the holiday selling season for canned foods begins. Cash flow should turn positive as Del Monte sells down its pack-season inventory.
Risks this quarter didn't answer
The earnings release did not include the conference call remarks or the quarterly filing notes, leaving several standing items unreadable today.
- Full-year outlook: management gives its annual sales, EBITDA, and segment margin targets on the call rather than in the release.
- Standalone Del Monte Foods results: exact acquired sales and profit since March live in the quarterly filing's acquisition footnote.
- Foreign tax disputes: updates on $275.9 million of contested transfer-pricing tax assessments and CEO tax withholdings await the filing's tax footnote.
- Debt covenants: headroom against the credit facility's leverage limit after the debt increase awaits the filing's debt footnote.
๐ Other Themes
Farm Closures Added $6.3 Million in Charges
Del Monte continued shutting down four banana farms in Costa Rica to exit high-cost land and focus on better returns. The company recorded $6.3 million in property and equipment write-downs for those farms this quarter, bringing total Costa Rica farm closure charges to $16.9 million over the past six months, alongside $2.4 million in costs to reorganize acquired operations in Mexico.
๐ฒ Other KPIs
Fell 27.5% from $0.69 a year ago even though gross profit rose 27%. Adding Del Monte Foods lifted selling, general, and administrative overhead by $15.1 million to 6.1% of sales (up 1.0 percentage point), while acquisition debt pushed net interest expense up to $6.3 million from $1.8 million.
Down 1.2% from 47.92 million a year ago due to share buybacks in the first half of the year. Nine-month share repurchases stayed at $20.1 million, unchanged from the six-month mark, showing that Del Monte paused buybacks in the third quarter while funding seasonal inventory.
By our math, third-quarter capital spending reached $29.0 million, up from $14.1 million in the same quarter last year, bringing nine-month spending to $69.2 million. That leaves the produce group on track to land inside the $85 million to $95 million full-year capital budget management set last quarter.
๐ฎ Guidance
Unchanged. The board declared a $0.30 per share quarterly dividend payable on December 4, keeping the annual payout rate at $1.20 per share despite the seasonal cash outflow. Del Monte gives its annual sales and profit outlook on the conference call rather than in the earnings release; by our math, hitting the middle of last quarter's $230โ240 million full-year Adjusted EBITDA plan requires $44.1 million in Q4, down 34% from a year ago.
โ Key Questions
Did the banana loss force a full-year outlook cut?
Management does not print annual targets in the release. With nine-month banana gross margin down to 2.2% after a third-quarter loss, we need to hear on the call whether the 3% to 4% banana margin target and $230โ240 million Adjusted EBITDA plan still stand.
What were standalone Del Monte Foods sales in Q3?
Prepared Foods grew by $200 million from a year ago, but the release combines acquired Del Monte Foods operations with legacy prepared products. The standalone revenue figure will show whether the acquisition is on pace for its $625 million full-year target.
How much will Costa Rica farm closures save annually?
Del Monte has booked $16.9 million in write-downs over the past two quarters to close four banana farms in Costa Rica, while spending $6.1 million extra on crop disease this quarter. Management has not yet quantified the annual cost savings from shutting these farms.
When will the $268 million inventory build turn into cash?
Inventories jumped to $849.6 million and pushed third-quarter operating cash flow to negative $40.9 million by our math. Investors need to know how much inventory will unwind in the fourth quarter and whether the prior $40โ50 million full-year operating cash flow target holds.