CAMPOS-LED Del Monte Pacific Ltd. (DMPL) saw a $29-million net loss in the third quarter of its fiscal year that started in May due to lower sales and higher operating costs.
In a stock exchange disclosure on Tuesday, DMPL said its November-to-January 2024 period net loss is a reversal of the $9.8-million net profit the prior year.
DMPL’s third quarter sales fell 5% to $646.7 million due to lower sales in the United States by subsidiary Del Monte Foods, Inc. (DMFI), and lower sales in the Philippines and exports of packaged pineapple by unit Del Monte Philippines, Inc. (DMPI).
DMFI saw a 6% drop in sales to $466.4 million led by the shift away from co-pack products that is packed for other manufacturers, as well as lower canned fruit and vegetable sales.
Lower sales were cushioned by higher tomato and broth sales, and increased foodservice.
DMPI recorded $107.4 million worth of sales in the third quarter, 4% lower in peso terms and 2% lower in dollar terms, as a result of weaker beverage sales following the emergence of simple juice drink brands and juice polyethylene terephthalate (PET) bottle formats.
The Philippine unit’s food service channel also recorded a 13% growth in sales led by new outlets, menu ideas, and products.
Sales across DMPL’s international markets fell by 21% on weaker packaged product sales, offsetting the 17% growth in the fresh segment. The strong sales of the fresh segment were led by higher volume of the S&W deluxe pineapple and better pricing.
“Packaged sales declined with lower sales to the US due to their inventory correction and unserved demand in other markets due to lower pineapple fruit supply,” DMPL said.
In the first nine months, DMPL recorded a $50.6-million net loss compared to the $28.9-million net profit in the prior year.
The company’s sales were maintained at $1.8 billion on “stable turnover in US and the Philippines” while gross profit fell by 26% to $360.4 million due to higher costs.
DMFI sales rose by 1% to $1.3 billion due to higher prices, while DMPL sales reached $291.2 million, which is 0.8% lower in peso terms and 0.6% in dollar terms caused by “declines in modern trade and general trade business.”
DMPL said it will close two vegetable plants in the states of Wisconsin and Washington to address higher carryover inventory levels and to lower costs. The green beans volume from the Wisconsin plant will be consolidated into another plant.
To further reduce costs, the company is also optimizing packaging materials, implementing power and fuel initiatives, making investments to enhance efficiency, productivity, and wastage minimization, and introducing product bundling initiatives in distribution centers.
DMPL is also “rightsizing” its workforce to lower its general and administrative costs. It is expecting to record better branded revenue growth in 2024.
“We expect that consumer spending will continue to be affected by inflation and high living costs. The group is focused on navigating through these challenges. Additionally, we will explore opportunities to enhance our capital structure, reduce leverage, and minimize interest expenses,” DMPL Managing Director and Chief Executive Officer Joselito D. Campos, Jr. said.
Meanwhile, DMPL announced that its unit Jubilant Year Investments Ltd. will issue $70 million worth of senior perpetual capital securities on March 18.
The issuance will be guaranteed by DMPI and Philippine Packaging Management Service Corp.
The proceeds from the offer will be used to settle certain derivative rights of DMPI minority shareholder, SEA Diner Holdings (S) Pte. Ltd., and redeem less than half of its shareholdings in DMPI.
On Tuesday, DMPI shares at the local bourse fell by 1.61% or nine centavos to P5.50 each. — Revin Mikhael D. Ochave
