Del Monte says expected 2008 operating cash flow could be used to pay down debt, fund M&A

By Jennifer Lanning Drey

Portland, Ore., Sept. 6 - Del Monte Foods Co. expects to generate operating cash flow of $345 million in fiscal 2008, which may be used to further reduce debt, pay dividends, repurchase shares or partially fund mergers and acquisitions, Del Monte's chief financial officer, David Meyers, said during a presentation at the Lehman Brothers Back-to-School Consumer Conference held Thursday in Boston.

Del Monte's expectations for 2008 also include producing cash flow between $180 million and $200 million.

"Attractive cash flow allows the company a significant amount of financial flexibility," Meyers said.

Del Monte's long-term financial targets include 7% to 9% growth in earnings per share, driven by net sales growth combined with a 12% operating income margin, topline growth from increased spending on innovation and debt reduction, Meyers said.

However, the company is currently challenged by inflationary costs and cost pressures, which it is working to combat with investments in innovation. The cost of fish used for the StarKist tuna brand remains a particular difficulty for Del Monte, Meyers said.

Del Monte expects to grow across its portfolio in 2008 with most of the growth coming from volume increases, as opposed to price increases.

San Francisco-based Del Monte is a producer, distributor and marketer of branded and private label food and pet products.

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