Del Monte Pacific swings to net loss as revenues from US operations decline

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DEL MONTE Pacific Limited (DMPL) swung to a net loss in the three months ending October 2017, weighed down by lower sales recorded by its unit in the United States.

In a presentation to analysts released Wednesday, the country’s largest canned fruits manufacturer reported a net loss attributable to the parent of $2.8 million, against an attributable profit of $19.97 million in the August to October period in 2016. 

This figure includes one-off expenses after tax amounting to $13.1 million, from its divestment from Sager Creek vegetable business, the shutdown of its production facility in Siloam Springs, Arkansas, and the shutdown of a tomato production facility in Plymouth, Indiana. 

Excluding one-off items, DMPL’s attributable profit stood at $10.24 million, still lower than the $20.82 million in the same period last year. 

DMPL blamed the losses to a 1.8% decrease in revenues to $624.7 million, due to lower sales of its US subsidiary Del Monte Foods, Inc. (DMFI), which account for 78% of the group’s total sales or $485.6 million. 

“We have taken some challenging but necessary steps in the US to realign our manufacturing footprint and strengthen our competitiveness in the long-term, amidst shifts in consumer tastes and shopping preferences,” DMPL Managing Director and Chief Executive Officer Joselito D. Campos, Jr. was quoted as saying in a statement.

Despite the decrease in sales, the company said it managed to widen its market share in the canned fruit and plastic fruit cup categories by 3% during the quarter. 

“We have also invested in brand-building to support our heritage brands in the United States and reinvigorate the categories we are in, while forging ahead with innovative products and entering new channels,” Mr. Campos said. 

On the other hand, Del Monte Philippines, Inc. saw its sales increase by 4% in peso terms, but down by 2.9% in US dollar terms due to the weakening of the peso. This includes sales in the Philippine market as well as exports. 

“Sales growth was driven by expanded penetration and increased consumption of its packaged pineapple fruit following improvement in supply,” the company said. 

On a six-month basis, DMPL recorded a net loss attributable to the parent of $2.08 million, against the $12.92-million attributable profit it recorded in the six months ending October last year. Sales, meanwhile, were down by 0.4% to $1.1 billion. 

Excluding the one-off expenses due to plant closures, DMPL noted it would have delivered a net income of $11.5 million. 

Amid losses for the first half of its fiscal year (FY) 2017, DMPL said it expects to make a profit in 2018. 

“Barring unforeseen circumstances, the group is expected to be profitable for FY 2018 on a recurring basis,” the company said. 

The company is currently offering $80 million Series A-2 Preference shares with an oversubscription option of up to $80 million as part of its fund-raising activities. The issuance has an annual coupon rate of 6.5%, and will be offered until Dec. 8, with listing on the PSE slated form Dec. 15. 

This issuance follows DMPL’s $200-million offering of preferred shares last April. 

DMPL is dually listed on the Singapore Stock Exchange and the Philippine Stock Exchange. At home, shares in DMPL lost eight centavos or 0.70% to close at P11.30 on Wednesday. — Arra B. Francia