Fitch: Del Monte outlook positive

Fitch Ratings said it revised the outlook of Del Monte Foods Co. and Del Monte Corp. to positive from stable and affirmed their BB long-term issuer default ratings and the BB+ senior secured bank facility and BB- senior subordinated notes of Del Monte Corp.

The agency said the positive outlook is driven by better-than-anticipated operating performance and the fact that cash flow generation will benefit from a more benign commodity cost environment in fiscal 2010.

Del Monte's ratings reflect the company's balanced financial strategy, solid cash flow generation and leading No. 1 and No. 2 market positions in processed produce and many of the pet food and snack categories in which it competes, Fitch said.

These factors are weighed against the fact that acquisitions have historically played a key role in Del Monte's growth, even though revenue has benefited from new product development; the competition the company faces in the pet products category from several large competitors with greater financial resources; and the significant increase in the company's marketing expenditures in order to build its brand strength and maintain its market positions, the agency said.

For the fiscal year ended May 3, the total debt-to-operating EBITDA was 3.4 times.

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