By Victor V. Saulon, Sub-Editor
DEL MONTE Pacific Ltd. (DMPL) mapped out a turnaround path for the company as it made a pitch to investors for its second tranche of US dollar-denominated shares that are on offer through Dec. 8.
Luis F. Alejandro, DMPL general manager and chief operating officer, said the most important factor for investors to look at is the organization’s new make up.
“We have a new CEO, new CFO, new supply chain head, we have a new sales head and up and coming very soon in the next couple of months would be a chief marketing officer,” he said in an interview at the company’s headquarters at Bonifacio Global City on Tuesday.
DMPL is offering the Series A-2 preferred shares with an oversubscription option of up to 8 million. The shares have a par value of $1 each and an issue price of $10 per share.
The shares have a dividend rate of 6.5% per annum.
The funds raised from the offering will be used mainly to pay the balance of a $154 million loan from BDO Unibank, Inc.
“So we have overhauled the leadership team after two years because only in doing so, can we at least increase our chances of fast turnaround,” Mr. Alejandro said.
Turning the business around, he said, boils down to the company’s leadership and management.
“So I think in that perspective, that’s the most important development that has happened in the past six months,” the DMPL executive said. “With the right leadership you exactly know what will happen.”
Mr. Alejandro also said the company hired consultants on how the company could further downsize its operations in the US.
“For the US, they have given us some good guidance on how we can downsize, and with downsizing the operation, we will be more competitive in our pricing and the same time, we’ll have more cash that we can put into profit and put into marketing spending that will further drive volume, revenue and therefore profit,” he said.
Parag Sachdeva, DMPL group chief financial officer, said the company would be on an “investment mode” for this year and next.
“We would be investing more than the usual in consumer and trade activation programs so that we can really accelerate in a declining category,” he said, referring to canned fruits, which have been overtaken by consumer preference for fresh fruits.
“This will require us to really invest, which will mean that profit performance in the next couple of years may be either flat or might even decline. That would lead to rebuilding the profit story in the next two or three years,” Mr. Sachdeva said.
“We are investing an incremental 3% of sales in driving the top-line growth,” he said, pointing out that the move would be for the company’s US business.
Asked to describe the size of the US operations as against the total, Mr. Sachdeva said: “I think it’s around 75%. It’s a big component from a sales perspective. But from a profit perspective, our Asian operation contributes more than 50% to the profitability of the company. We do expect the US to start contributing bigger from a profitability perspective in two to three years time.”
For full-year results ending in April 2017, DMPL reported sales of $2.3 billion, down 0.9%, largely because of lower US sales.
