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Cito Alejandro. Sorry for the inconvenience. So we will restart right now. And we will first start with a review of Parag Sachdeva. Thank you.
Good morning, everyone. We do apologize for the confusion. We'll start with Slide 4. In December 2020, DMPL sold another 1% stake, thereby now owning 87% of DMPI. In addition, DMPL's effective stake in Del Monte Foods increased to 93.6% starting May 2020. And hence, we recognized a 6.4% NCI to that account as well. These 2 comprise the NCI line in the DMPL's P&L. On Slide 5, key highlights for the quarter. Group sales grew by 13.1% due to higher consumption of healthy shelf-stable food with U.S. sales up 12.5% and Philippines sales growing by 19.9%. DMPL achieved improved gross margin of 26.9% from 20.4% last year on better sales mix, lower trade spending and lower costs. Del Monte Pacific delivered EBITDA of $99 million and net profit of $30.2 million, which is a four-fold increase over last year, and pleased to report there were no one-off items during this period. DMPL's U.S. subsidiary, Del Monte Foods, achieved an EBITDA of $61 million, which was more than double the prior year's $26 million and delivered a net profit from a loss last year. DMPL reduced group net debt to USD 1.3 billion from $1.6 billion. And accordingly, gearing improved to 2.2x from 3.3x last year. Slide 6. In terms of outlook, pleased to report that aside from DMPL base business, DMFI is also very well positioned to improve performance in fiscal year '21 with better sales mix and management of costs. We do not anticipate material one-off items in balance of the year, and the DMPL group has returned to profitability in fiscal year '21. On Slide 7, group results summary for the third quarter. Sales of USD 628.4 million is an increase of 13.1%. U.S. sales up 12.5%, Philippines higher by 13.8% in local currency and 19.9% in U.S. dollar terms. S&W brand in Asia declined by 6.5%, mainly due to lower sales of branded fresh pineapples in North Asia. But that was compensated by higher sales to OEM customers. Our JV in India declined by 6.1% in local currency as B2B business did get impacted by COVID-19, though it was partly offset by surge in retail and e-commerce sales. EBITDA of USD 99 million for the group is up 71.8% from $57.6 million due to higher volume and better sales mix in U.S. and Philippines getting a lift from pandemic-driven higher consumption of trusted, healthy, shelf-stable products and also worthy to note, due to active cost management with significant savings from DMFI's asset-light strategy and other cost-saving initiatives. Operating profit of $74.3 million, up 141% from $30.9 million. Net profit of USD 30.2 million, up 4x from USD 7.4 million, including the impact from minority interest changes that were explained on Slide 4. There are no one-off items this quarter. All figures above are versus prior year quarter excluding one-off items. On Slide 8, a quick rundown on nonrecurring expenses. As mentioned before, no one-off items in third quarter. Impact of one-off costs in third quarter of fiscal '20 on a post-tax basis was only $0.7 million. And on a 9-month basis of fiscal year '20 on a -- again, on a post-tax basis, it was $96.4 million. On Slide 9, a more detailed overview of our Q3 results. Third quarter sales at $628.4 million are 13.1% higher than last year from higher sales in U.S., Philippines and also resurgence of international market sales driven by the pandemic and improvement in supply of processed and fresh pine in the second half. This will be explained more in the turnover analysis. Our gross profit at USD 168.9 million, higher by 48.9%, driven by volume, favorable mix and lower trade spend in the U.S. Our gross margin at 26.9%, higher by 650 basis points, led by lower trade spend, lower costs driven by DMFI's asset-light strategy and improved sales mix, both in the U.S. and the base business. Margin for the base business improved by almost 210 basis points and for the U.S., by a significant 930 basis points during the same period. EBITDA of USD 99 million, up 73.9% from $57 million, mainly due to increase in gross profit and gross margin. OI followed EBITDA at $74.3 million, up 146.1%, which is a complete turnaround with an increase of USD 44.1 million. Our net finance expense at $26.7 million reflects higher interest cost driven by the coupon rate on high-yield bonds that were issued in the U.S. in May 2020. DMPL share in FieldFresh joint venture was a loss of $100,000, which is an improvement versus last year, reflecting continued recovery of B2B business from the pandemic impact and also good control on costs. Higher tax expense due to higher net income before tax this year. Net debt, as mentioned previously in the highlights, at USD 1.3 billion is significantly lower by $277 million due to improvements in cash flow from operations, both in Q4 of '20 and in the first 9 months of fiscal year '21. Gearing ratio follows the net debt and also improvement in the shareholders' equity driven by the profit for the first 9 months. On Slide 10, we'll cover the turnover analysis. Americas constituted 70% of total group sales, higher by 12.5% in the third quarter to USD 443 million, mainly driven by higher volume due to increase in demand from COVID-19 across categories and higher sales to co-pack customers. DMFI benefited in the categories and segments with strong leadership position. And our volume share outpaced category growth across all major categories, except for 1, on a 52- and 13-week basis. New products contributed 6.6% to DMFI's retail and food service sales in the third quarter. Asia Pacific sales in the third quarter increased by 14.6% to $174.3 million from $152.1 million, mainly due to growth in all major segments, including Philippines and recovery of fresh pineapple sales that increased by 11%. Sales in the Philippines, domestic market were up in both peso and U.S. dollar terms by 13.8% and 19.9%, respectively, mainly due to higher volume both in general and modern trade and favorable sales price variance. We continue to progress with distribution transition and general trade and are also seeing early signs of recovery in foodservice business. Europe sales at $10.8 million increased by 16%, mainly from higher sales of beverages as our supply improves in the second half.
Now moving on to year-to-date month 9 results, starting with the summary on Slide 12. Sales of USD 1.7 billion is up 11.7%; U.S. sales, up 12.9%; Philippines, higher by 11.4% in local currency and 17% in U.S. dollar terms. S&W brand in Asia declined by 10.4%, mainly due to lower sales of fresh pineapple in North Asia in the first half of fiscal year '21. JV in India declined by 15.8% in local currency as B2B business did get impacted by COVID-19. EBITDA of $235.8 million, in line with our Q3 results, up 42.2% from $165.9 million last year driven by higher volume, better sales mix in U.S. and Philippines, which was helped by the pandemic-driven higher consumption of trusted, healthy and shelf-stable products. DMPL's operating profit in line with EBITDA, up 62% from $100.4 million last year. Net profit of USD 48.8 million, up 77.8% from $27.4 million and also includes the impact from minority interest changes that were outlined on Slide 4. Again, no one-off items for the first 9 months. All figures above are versus prior year quarter and exclude one-off items from last year. Next slide, please. On a reported basis, a little bit more deep dive on our results. Year-to-date month 9 sales up 11.7% from higher sales across both U.S. and the base business driven by Philippines and S&W package sales in Asia when it comes to the base business will be explained more in the turnover analysis. Gross profit at $422.8 million, in line with sales, higher by USD 84 million, driven by increased sales, more importantly, better sales mix and lower trade spend. Our gross margin at 25.4%, higher by 270 basis points, led by lower trade spend, improved sales mix both in the U.S. and the base business. Lower cost in the base business also contributed to improvement in margin. Margin for the base business increased by 240 basis points to 31.2%, whereas for U.S., gross margin improved by almost 340 basis points to 22.2%. EBITDA in line with gross profit improvement at $235.8 million is significantly up from $86.3 million on a reported basis last year. Would just like to clarify that increased depreciation from change in accounting of leased assets is USD 9.2 million in fiscal year '21. OI of USD 162.7 million, in line with EBITDA and gross profit, up 62% on a recurring basis, and it's a complete turnaround on a reported basis with an increase of $141.8 million. Net finance expense of $79.2 million, as explained in Q3 results, driven by the coupon rate on high-yield bonds issued in the U.S. DMPL's share in the FieldFresh joint venture on the loss of $1 million but pleased to report that we continue to progress in our JV despite a significant impact on our B2B business. And that has been brought about by gradual improvement in the contribution margin and also optimization of overheads and lower marketing spend to really offset the impact of decline in B2B. Our higher tax expense last year, as Del Monte Philippines declared a dividend to its parent, which was taxed at 15%, amounting to almost $40 million. Net debt, we have covered in Q3 results, $277 million [ lower ] in the first 9 months. I'll now draw your attention to the turnover analysis for our month 9 -- year-to-date month 9 results. Americas, in line with Q3, constitute 70% and is up 12.9% in the first 9 months to $1.17 billion, mainly driven by higher volume and lower trade spend. DMFI benefited in the categories and segments with strong leadership positions as explained in Q3 results. Our growth in addition to the category tailwind was also driven by increased distribution in club stores, e-commerce and emerging channels. New products contributed 7.1% to DMFI's retail and foodservice sales in the first 9 months. Asia Pacific sales in the 9 months increased by double-digit at 10.1% to $476.7 million from $432.9 million, driven by Philippines and S&W sales of shelf-stable packaged products, partly offset by lower sales of fresh pineapple in China from lower demand attributed to COVID-19 only in the first half. Q3, our fresh business has recovered. On an overall basis, it has grown by 11%. Sales in the Philippines, domestic markets were up in both peso and U.S. dollar terms by 17% and 11.4%, respectively, mainly due to higher volume both in general and modern trade, which is almost majority of our Philippines business. This was also favorably impacted because of a favorable sales price variance in the first 9 months when it comes to the Philippine market. The strong retail growth was driven primarily by the beverage category and the culinary segment as consumers continue to prepare meals more at home. Europe sales, lastly, declined at USD 21.5 million by 8.1%, mainly for -- from lower sales of beverages in the first half driven by lack of supply. With that, I would hand over to Greg to further provide a more detailed overview of our performance in the U.S. market.
Thank you, Parag. If we turn to Slide 16, I'll begin to provide my update on the U.S. market. To begin, we maintained our leadership share positions in each of our core businesses in the third quarter. Our canned vegetable, canned fruit, Fruit Cup snack business and canned tomato business performed well, and in addition, had a very strong quarter across our College Inn broth business. As Parag mentioned, strong category growth continued into the third quarter. COVID has certainly helped our business, but we've also benefited from, really, trends that had existed before COVID in the U.S. market, more consumers working from home looking for healthy meals, more consumers cooking from home and looking for home meal preparation solutions, continued growth in health and wellness for our business and then a very successful effort for us to grow distribution in more channels such as the club store channel, all drove performance in Q3. What's happened during the pandemic is that many consumers in the U.S. market have sought out brands that they trust, brands that they recognize, that they know stand for premium quality, that will help prepare better home meals for them and their families and help them eat on a more healthy basis. So clearly, our portfolio fits that trend, and we do believe that, that trend -- much of that trend will continue post COVID in the U.S. markets with powerful brands winning. The growth for our business has been quite strong. And as we've balanced supply to keep our customers intact, we delivered a very strong holiday period and pleased to report a very strong January within the quarter. And we're committed to these brands on a long-term basis. We've been laser-focused on building our brands, bringing differentiated and innovative products to market and expanding our distribution channels so that progress, that commitment will allow us to continue to grow top line sales beyond COVID. The next slide, Slide 17, pleased to report our third quarter U.S. market results. Our sales improved by 12% in the U.S. market to USD 440 million and pleased that, that was driven by our strategic efforts to grow our brands. Branded sales grew 26% in the quarter. And the reason that there's a delta between 12% and 26% is that we consciously have been exiting profit dilutive business. So we've been exiting private label contracts and other business that did not bring accretive profit or margin and moving those raw products into branded sales and achieving dramatic growth and gross margin, very consistent with the strategy that we outlined over the past few years. Higher sales of new products, we continue to increase the size and scale of our new product success. It's now accounting for over 5% of our total DMFI sales and over 7% of branded sales in the third quarter. A part of that is our acknowledgment and recent product of the year award for our new Del Monte Deluxe Gold Pineapple. This is a premium canned pineapple product produced by Del Monte Philippines and is an amazing product that's been well received by customers and consumers. And there's really nothing like it in the U.S. market in a package form. And as well, the vegetable -- veggie pockets, Veggieful Pocket Pies, that's a frozen product line; and we're committed to becoming stronger in the frozen categories. Frozen has done quite well during COVID, and it was doing well before COVID. So we're going to build a presence and a beachhead in this frozen category. This is just one of our new product launches. There's others that are occurring. We've won 5 of these awards now over the past few years, so clearly a sign that consumers are enjoying our new products, and we're -- and they're resonating with consumer needs.
E-commerce obviously saw accelerated growth in the quarter. Almost all of our traditional grocery customers are now venturing into e-commerce with home delivery or curbside service and having success. And we partnered with them in those efforts. I mentioned gross margins. Gross margins for the quarter were at 24.4% from 15.8%, and that's really driven by 3 things: our focus on selling more branded business, which is improving mix; being more responsible with our trade spending, not discounting the way that the brand had been discounted historically before the past few years of our efforts to lower trade spending; and then importantly, asset light. We talked about asset light over the past year plus in terms of taking costs out of our system, helping us improve asset utilization and with that, doing a number of things across procurement and our supply chain to overall lower cost of goods. And that's now showing up because we're selling our inventory from our new pack season, and that's generating these improved gross margins. We improved EBITDA substantially to USD 61.2 million for the quarter from USD 26.0 million. And we also, I'm pleased to report, generated a net profit for the quarter, reversing a loss from prior year. Now I'm going to show you some examples of some of the investments we're making to build our brands with consumers. I mentioned a very strong holiday performance, continued our partnership with brands such as Campbell's to produce very important holiday meals, such as the green bean casserole in the U.S. market, very popular dish at Thanksgiving and Christmas and had a lot of success with that this year. Continue to promote our Fruit Cup business. We saw some nice growth in our Fruit Cup business this quarter and on a year-to-date basis. A lot of investment during return to school. Even in a remote environment, moms need to feed their kids healthy snacks and had great success promoting those products. Slide 19 talks about our Bubble Fruit product. Again, this is a brand-new innovative product, performing quite well with the consumer, with bursting boba inside these fruit cups combined with delicious fruit products, doing a lot of work with forms of social media like TikTok. College Inn for us had a very successful holiday. We actually had a very strong October right before the third quarter with volume shipments. We earned more merchandising activity earlier in the holiday season that really ended up being very successful for us. So we managed [ those activities ] right before they were planning their purchases and throughout the holidays and also followed up with some very strong advertising. Here, you're seeing our new Savory Infusion product line. Savory Infusions is a form of adding flavor and helping to make broth at home. And then we also featured bone broth. That's been a very successful form of innovation for us. We now have a complete line of bone broth products, which is a very popular item for a lot of holistic reasons in the U.S. market. Slide 20. A lot of PR activity going on, a lot of activations for our brands. One thing that's important to note that's happened with the onset of the pandemic and consumers looking for more home meal preparation, looking for more brands that they trust to prepare home meals, our number of households buying our products has grown by double digits. So our household penetration, which is a measurement that we track, has grown by double digits. And what we've done is really connect with those consumers. Those new consumers that are coming in to buy our products, many of them were not experienced in the kitchen. We had to teach many of them how to cook, give them recipe ideas, help them gain confidence in home meal preparation and are pleased with our efforts. And those consumers are keeping -- keep coming back to our categories. We're seeing them buy a second and a third and a fourth time across our portfolio. Also continued our great work with Growing Great. Growing Great is a partnership we have with school systems throughout the U.S. to help promote education around nutrition and healthy eating and continue that even in a distance learning environment. U.S. foodservice business on Slide 21. Our team has done a really good job of keeping that business performing well. We've kept our revenue fairly flat this year, but we've also been able to drive improved margin [ that's surgical ] and strategic in the businesses that we pursue. Pleased that we're building increased business with 2 of the nation's largest broadliners, US Foods and PFG, adding more products to their distribution portfolio so we can reach more end users. Also doing a lot of work with health care systems on our new innovative and healthy grab-and-go products like our veg and grain bowl products. And then lastly, [indiscernible] contract with Kentucky Fried Chicken, the KFC chain, on our green bean business. So nice little [ business ] for us across foodservice. And we're focused on growing all channels of business. We see a great potential for future top line growth. If we think about other channels beyond foodservice, like the club store business, the natural channel, convenience, drug [indiscernible] including the dollar and value channel. So looking forward to more growth ahead and more improved results. And with that, I will hand it over to Mr. Cito Alejandro.
Thank you, Greg. Good morning to all of you. Good evening to others. I will now review the -- all the businesses outside of the U.S. Chart 22. We exited the third quarter with very strong growth in the Philippine market. As you can see on the chart, our volume growth has led to expansion of our market leader shares across all categories. Del Monte products remain very much sought after by consumers because of its trusted, healthy and high-quality reputation. We continue leveraging the trend towards increased home cooking, our spaghetti sauce category being one of the major beneficiaries.
Going now to Chart 23. Philippines sales grew 20% in dollar terms and 14% in peso terms. The retail channel grew 27%, offsetting the weakness of foodservice. A lot of the food establishments in Manila are still below the pre-COVID traffic sales, so that has become still a nagging problem for the foodservice business. Packaged fruit and culinary products registered growth behind continued promotions on home cooking. Our fruit juice portfolio also did well with continued advertising on immunity benefits. We also launched a new Del Monte Kitchenomics app to address the needs of those who know how to cook and those who are just starting to cook. And it actually features thousands of recipes, meal planners, shopping tips, and now it has an easy link to e-commerce platforms like Lazada and Shopee.
Chart 24. The next couple of charts will show our marketing activities across our categories, all of these aimed at increasing consumption of our products. In this chart, you will see our advertising initiatives on increased usage of our pineapple fruit, particularly during the Christmas season. I would like to direct your attention to our new product, Del Monte Deluxe Gold. This product has the same fruit variety as our renowned S&W fresh pineapple. We first sold it in the U.S., doing extremely well. We also introduced it in a limited store test in Manila, and it also did well. So we will plan for its expansion outside of the U.S., in the Philippines and also in other S&W markets. Chart 25. We have made our beverage portfolio more relevant during pandemic times by way of very strong communication of their health benefits. Pleased to report that our total fruit juice business has exceeded historical growth trends. Chart 26. After beverage, our second fastest-growing and equally profitable category is culinary products or cooking aids. We have focused our initiatives on the growing trend towards more home cooking. As you can see from this chart, our goal is to make the family's time staying at home never a dull moment when it comes to delicious, healthy food cooked with Del Monte products. Chart 27. These are more examples of our marketing efforts in culinary. To the left is the new Del Monte Ginisa mix, which means a tomato sautee mix. To the right is our new, more affordable tomato sauce, which is positioned in the low-price segment but sold only in several cities in Southern Philippines where competitive price brands are major threats. Chart 28. Here are some more examples of our culinary marketing. Our product quality and superior acceptance are well patronized in all of our advertising. So you now see here our Del Monte Quick 'n Easy and our Del Monte spaghetti sauce. Moving now to S&W on Chart 29. Because of the impact of COVID, China, which is our major market for fresh pineapple, severely affected our S&W business for the most part of last year. However, pleased to report that starting the third quarter, sales volume has steadily recovered and is fast approaching pre-COVID levels. We are also present across digital formats in North Asia. S&W is in most of the portals in China and South Korea. Fresh e-commerce sales in China has also started to pick up, albeit from a relatively small base. Chart 30. Sales of S&W packaged products declined 9% due to temporary supply issues on several SKUs. We expect to resolve this quickly and fill up back orders this March and April as we close our fiscal year.
Quarter 3 sales of fresh pineapple grew 11% versus a year ago. We expect quarter 4 to be equally favorable. With the recent ban on imported Taiwan pines into China, S&W has been inundated with huge orders. Of course, we're taking advantage of this opportunity, and we are filling orders as much as we can. There is no indication to date that this Taiwan issue will be resolved soon. Chart 31. Here are some great examples of our S&W pineapple being used in quick-service restaurants: McDonald's in Hong Kong and Popeyes chicken in China. Chart 32 features other examples of merchandising and promotion programs on S&W packaged products across grocery accounts and e-commerce. All these add to increasing the traction of the S&W business. And finally, on Chart 33, moving on to our India business. DMPL's share in India was lower than prior quarter as business continues to recover from the impact of COVID, particularly on foodservice and quick-service restaurants. Retail and e-commerce sales have surged. We also introduced new products to leverage the continued trend towards home cooking. We have also embarked on major productivity and cost savings to ensure we optimize our costs and protect our margins. That's all I have, and I turn you over to Iggy.
Thank you, Cito. Scalability is one of Del Monte Pacific Group's 5 strategic pillars supporting our vision: Nourishing Families. Enriching Lives. Every Day. While our commitment to society and the environment is one of our 6 corporate values. We are gearing up for the Rainforest Alliance certification of our pineapple operations facility in addition to the other certifications we already have, including Global, GAP or Good Agricultural Practices, PhilGAP, ISO and others. Initiatives are underway to enhance [ oil ] conservation. Our pineapple operations has been in the Philippines since 1926, a testament to the high productivity of our land. We will install a solar power facility in the Philippines, which will expand our renewable energy footprint in addition to our waste-to-energy facility in the Philippines, solar facility in the U.S. Today, we have collaborated with over 300 organizations to support marginalized communities and frontliners during the COVID-19 pandemic. In the U.S., NBC news network recognized Del Monte Foods' efforts in reducing plastics, carbon emissions and waste by donating products to food banks. We have also identified key sustainability priorities across stakeholders. Del Monte Pacific's FY '20 sustainability report was shortlisted as a finalist in the 2020 Asia Sustainability Reporting Awards in Singapore for Asia's Best Community Reporting category. This is our second recognition by the ASRA in Singapore. On Slide 35, to recap our outlook, which Parag explained earlier, we will continue to meet sustained demand for our trusted, healthy and shelf-stable products as we optimize our production while implementing stringent safety measures against COVID-19. Our strategy is to strengthen our core business, expand the product portfolio in response to market trends for health and wellness, and grow our branded business. Del Monte Pacific is well positioned in this environment given our nutritious and long shelf-life products, which enable consumers to prepare nutritious meals at home and build their immunity during the COVID-19 pandemic across our markets in the Philippines as well as in the U.S. In the Philippines, we are the market leader in packaged pineapple, mixed fruit, ready-to-drink juice, tomato sauce and spaghetti sauce. We are among the top 3 exporters of fresh pineapple in North Asia. DMFI is also well placed to improve performance with a more efficient supply chain accomplished from restructuring the last fiscal year, better sales mix and management of costs. The Del Monte Pacific Group expects to generate a net profit for the balance of the year and a net profit full year with the robust growth of our business in our core markets in the Philippines and in the U.S. So with that, we would like to open the floor to questions. Thank you.
Do you have any questions?
Any questions? Jen?
[ George ] has some questions. [ George ]?
Go ahead, please.
Yes. Can you hear me?
George, go ahead.
George, please go ahead.
Can you hear me?
Yes.
Okay. I guess a congratulatory note is in order for a good -- actually excellent third quarter performance. I have a few questions though. Well, we know our business -- the biggest business is in the U.S., but it is still disproportionately contributing to the net profit. So my questions are actually related to that. So the first question is, with the U.S. vaccination being rolled out and people and the economy opening up and the Biden stimulus package being passed, how will this impact our revenues and turnover for the U.S. subsidiaries?
Cito, I'm happy to answer that. Great question, [ George ]. The -- we feel pretty optimistic about the outlook for growth and consumption of our products. We have a lot of tailwinds coming out of this period of COVID. As I mentioned, we dramatically increased the number of households that are buying our products over this past year, and those consumers have kept coming back to our categories. That's a starting point. So we've been able to reach many more users than we have in previous years. The trends coming out of COVID, we're going to continue to see more and more U.S. companies work -- have employees who work from home or work remotely. And those consumers will need to eat healthy and eat snacks throughout the day, and we can provide those products. You also think about the amount of home meal cooking that was going on pre COVID that will continue after COVID. We are positioned very well with our ingredient business, our tomato business, our broth business and our vegetable business continues to see growth as the economy has opened back up. So we feel good about that. The trends, overall, in terms of health and wellness, fit very well into our entire portfolio. I also -- if you follow -- the stimulus package will provide some temporary relief in the U.S. market for consumers, but there are a lot of consumers that were hurt by the pandemic. We have very high unemployment. It's a recessionary environment, and our products provide healthy nutrition at a value. We've performed quite well during recessionary periods such as the one we're heading into right now. We've seen -- we saw dramatic increases in velocity of our products then, and we continue to see this interest. There's a lot of reasons to believe that we're going to find growth for our products coming out of COVID. I'd also add that we have recently begun a new strategic initiative to enter more types of channels of trade. We historically weren't selling these channels such as the natural food channel, the club store channel, the dollar channel, the value channel and have recently earned some very large contracts that are permanent business contracts that will keep driving business after COVID. So a lot of reasons to believe in the outlook for revenue growth for the company.
I see. Okay. That is -- the outlook looks good. Now if I were to ask on our pricing power, I know our CP rate has gone up, but this is mostly because of cost efficiencies and asset-light strategy. So I was thinking on the pricing power, do we have that ability to pass on or command our own prices for our products?
We do. We do. And over the past 2 years, we've raised our average unit pricing between 7% and 10% across our businesses. So we have raised prices, and we'll continue to do that to pass along inflationary pressure. It may not always come from a list price increase. We may pull back on some trade discounts that will result in a higher average price on shelf. But we have premium brands that have performed quite well when not discounted. And I'll use this recent holiday period, [ George ], as an example. We did not discount our products over Thanksgiving, Christmas. We pulled back all of our trade investments, and we sold a lot of our products at dramatically higher retail prices than we ever have at a holiday, and so it was a success. So consumers will pay more for brands they trust, and we do have that pricing power in our advantage going forward.
Yes, that's encouraging. Yes. Interesting. On the cost side...
Just to build on it, [ George ] -- sorry?
On the cost side -- I hope I can still ask my questions.
Yes, please.
If you probably notice, the price of tin has doubled in the last 12 months, and that will impact our canned items. How do we intend to handle this?
Yes. I'll let Parag comment on this. But I think one -- before he comments, we have been attacking cost throughout our entire enterprise, and we have a number of cost savings initiatives that are occurring, especially in the supply chain to offset our inflationary pressures, and they will always be there, [ George ]. Every year, we'll have inflationary pressures on some part of our business, and our cost -- detailed 5-year cost savings plan will offset those. But Parag, any comments you'd like to make on some of that work in the tinplate market?
Yes. No, you've covered it, Greg. Plus when it comes to the U.S., [ George ], we have locked in the prices for 2021, so we are covered. We have some inflation, but it's manageable. Plus on the base business, also, we are seeing impact, a big impact on -- from the tinplate increases as you said. But we are looking at various options including down gauging as well to offset some of the increase in tinplate costs and also looking at alternative sources for the base business.
Yes. Yes. Okay. It's just quite a little bit -- in a sense, looking at the chart of tin price, it's a little bit worrisome, doubling in less than a year. So that was kind of difficult to pass on, in a sense. That's just a worry that I have to raise for this discussion.
No, it's a great question. Plus what we are doing is...
And the other item that we are looking at for the U.S., it's the high leverage, the borrowings because interest expense is probably one of the areas we can generate a lot of bottom line figures. So I guess it depends on how we can deleverage given our improved cash flows and EBITDA. Is there a program to bring down our debt to even a lower level than 2.2x?
Yes. We are looking at options, and we are also in discussions with our banking partners to further optimize and reduce our interest costs, particularly on the ABL. So we continue to drive our leverage down through improvement in cash flows in the short term as well as look at options of reducing our interest rates and credit spread on the ABL as our performance improves and has improved in the last 2 quarters.
Yes. And it did improve. Yes. Is there a time line for that?
Yes, it should be in the next 2 months.
Okay. That's -- so that's going to impact, I guess, 2022 fiscal year, yes?
Yes, it should favorably impact us in next fiscal year.
Okay. So that's on Del Monte Foods. On Del Monte Philippines, my only question really is how is our IPO plan proceeding?
Yes. We are looking at the possibility. We are looking at the possibility of IPO.
Yes. Because that's probably going to add more excitement to the company's brand, in a sense, from a investor's point of view because I think that's how we would be able to unlock the value of Del Monte Philippines.
As Parag said, we're exploring that option subject to market conditions, and an announcement will be made in due course as appropriate. So we will keep the market posted.
Yes. Because there have been a lot of large IPOs already, so I was thinking what favorable condition are we really waiting for when other companies push ahead with their plans.
Yes. We are working on it, [ George ], and looking at the possibility. So it's work in progress.
Because I think that's really the way to unlock the value of the Del Monte Pacific price because the 13% stake that we sold is already valued at PHP 21 per share and look at our stock price. It's not even PHP 10. So you can imagine how undervalued we are, and we're just talking about a small Philippine subsidiary, whereas largest subsidiary in the U.S., [ 3x ] as big, and it's almost valued at 0. So I am just quite optimistic in a sense of [ best ] value but a little bit uneasy because it's kind of taking so much time to unlock something that's really there. But having said that, I guess I'm glad to hear that it's in work in progress. Okay. I think that's pretty much more of my questions. I was about to ask about China and Taiwan and pineapples, and it was answered already in the earlier discussion. Yes, that's about the questions I had in my list.
Thank you so much, [ George ], for your keen interest. Appreciate it.
Well, I'll always be -- can be interested because Del Monte is a core investment in my portfolio. It's 85% of what I own. So I'll always be there. And if I can help, do let me know. I keep, well, pretty good -- well, I regularly post about -- my own thoughts about the company. And I have 20,000 followers in 1 group, and they're now starting to look at the company more and more closely given that I've been talking about it endlessly in my post.
Thank you, [ George ]. Are there any other questions?
This is [ Wei Ling ]. Can you hear me?
Go ahead.
Yes, [ Wei Ling ].
Okay. My first question is that the various category in the U.S., we have seen market share. But is the market share increasing or decreasing? Just want to get more colors in terms of are we growing together with the markets or are we gaining market share.
Great question. I'm pleased to report that over the past 52 weeks, we've exceeded category growth in all of our businesses on a dollar basis and an Eq volume basis. So yes, we are growing share faster than the categories are growing, and that's a critical performance indicator for us.
Okay. Take the canned vegetable for example. It's 18.9%, right? Compared to a year ago, what is the difference?
Yes. The share gain would be probably a few 100ths of a percentage point. It's not quite up a share, but we've certainly incrementally grown that share and added to it. In the midst of a category that's growing 20-plus percent, it's pretty impressive. And as I mentioned earlier, we're growing faster than the category, and where our share growth is coming from typically has been private label. Private label is down in each 1 of our categories on a 4-week, 13-week and 52-week basis, so the consumers are preferring brands and preferring leading brands like ours. So we are seeing growth from a few percentage points to several percentage points across broth, tomatoes, fruit and vegetables.
Okay. All right. Good to hear that. But in future, it will be good to see a U.S. chart similar to the Philippine chart because it made a lot of sense, right? Like the Philippines, we see a 6.3% increase in the market share for canned mix fruit, so that's very encouraging. And so I hope to see something similar on the U.S. channel later on.
Okay. Thank you for that feedback.
Okay. All right. The other question is on e-commerce. It seems like e-commerce is all growing for U.S. and for Asia as well. May I know the e-commerce, are we going to third-party e-commerce sites? Or are we doing anything direct to e-commerce? Are we doing any direct sales?
Cito, would you like to answer that?
So in the U.S., we have -- majority of it is through our retail [ channel ], but we also have -- are developing our business with Amazon, which is growing at an accelerated pace on a small base.
But no direct -- we don't have any direct-to-consumer business in the U.S. We go through third parties.
Understand. Okay. All right. And the e-commerce, is it more than 5% of the total business so far? Or still very small?
It's less than 5%.
Yes. It's approaching that though. With the growth curve we have as we roll up the total value, that's certainly an insight.
Okay. Cool..
Less than 5% today but approaching 5%.
Yes, yes.
All right. And I guess the rest of my questions were asked by [ George ]. He has very good questions, and I support him in the listing of the share in Philippines. So good to hear that. And then the U.S. bonds is really high in terms of coupons. If we can buy some back, that will be good. Good to hear that as -- it will happen in the next 2 months.
Just to be clear, we are not planning to buy the bonds in 2 months. It's just that we are expecting favorable adjustment in our interest rates when it comes to our working capital lines or asset-based lending lines.
I see. I see. So in terms of cost of capital, is the 11-plus percent in the U.S. bond, is that the highest that we have? Or would you have something even higher?
That's the highest.
That's the highest. Okay. Got it. Yes, that's all. Congratulation on the turnaround of the business.
Thank you.
Thank you, [ Wei Ling ].
Can you hear me?
Yes, please.
This is [ Victor ] here. Congratulations on the good results. Just wanted to check, your gross margins for the third quarter and also year-to-date, 25%, 26%, the highest it's ever been for the last 10 years. What do you think will be the margins going forward? Is this something that's sustainable? Because the last couple of years, your GPM has been bouncing around, what, 18%, 19%, 22% max, so this is quite high. So I'd like to find out the sustainability of these margins?
Yes. I think we -- the performance that you see is really ongoing. There were no one-off events that influenced our gross margin for the third quarter. Obviously, there is some impact that we are expecting from inflation but just considering the measures that are being taken across, whether it's on the revenue side or the cost side, we really plan to sustain our margin performance from a group perspective with an aim to continue improving our margin performance in the U.S.
Okay. So you don't think it's something that will regress perhaps maybe in between 20% to 25% next year onwards when the economy fully opens up?
No, we don't expect that to, and we are prepared to really have plans in place to offset some of the inflationary trends that we are seeing either through improved productivity or lower rates or optimizing our trade spend. So plans are in place to offset it and continue really sustaining or improving our gross margin performance.
Okay. Great. Great. And is there a target gearing level that you guys are trying to get towards for the next 2, 3 years?
Yes. I mean, long term, as we look at unlocking and if all goes well and our plans are in -- fall in place for the IPO, we will look at improving our gearing to around 1.3 to 1.5x from a group perspective.
Okay. And could you give a CapEx guidance for the next financial year?
So CapEx guidance, you can assume nothing dramatically different to what you're seeing now. It's in the range of $20 million to $25 million both for Asia and U.S. business. So in total, we are looking at $40 million to $50 million.
Okay. Great. And also, sorry, one more question. Do you have a dividend policy?
Yes, we have a dividend policy. And as long as we continue to have profits, we do tend to declare it. And it's 33% at a minimum.
Are there any other questions?
This is [ Jason ]. Great quarter, guys.
Thank you.
Parag, can you hear me?
Yes. Thanks again.
Great job, guys.
Are there any other questions, Philippines or Singapore? Jen, are there any other questions that were sent through you?
No. I think the...
So if there are no other questions, we will conclude our conference call, and thank you for joining us, and stay well.
Thank you for your support.
Thank you.
Bye-bye.
Congratulations and thank you again.
Take care, [ George ].
Thank you, [ George ].
Thank you, [ George ].