Del Monte Pacific posts profit of $8.5M

Campos-led food and beverage conglomerate Del Monte Pacific Ltd. (DMPL) chalked up a net profit of $8.5 million in the quarter ending January 2017, a turnaround from the net loss of $4.8 million year-on-year, as higher sales out of Asia made up for the slack in the US business.

For the nine-month period ending January, the group posted a net income of $19.9 million, lower than prior year period’s $32.3 million due to non-recurring items.

Excluding those one-off items, DMPL’s core net income stood at $26.7 million in the nine-month period, a significant improvement from last year’s net profit of $9 million.

Without the one-off items, the group delivered a recurring net income of $11.6 million in the quarter ending January 2017, more than five times higher than last year’s recurring net income of $2.1 million for this third quarter in its fiscal year, the company disclosed to the Philippine Stock Exchange on Friday.

“Our significantly higher profit was driven by strong sales in the Philippines and S&W Asian markets as well as operational efficiency improvements resulting in cost reduction. We continue to build on the consumption-driven growth in Asia as our team optimizes opportunities in both the retail and food service sectors,” Joselito Campos Jr, managing director and group chief executive officer of DMPL, said in a press statement on Friday.

“Meanwhile, our US business continues to be impacted by shifting consumer preferences, and our performance in the foodservice and private label sectors. We are implementing a strategy based on innovation and differentiation in existing categories, while seizing opportunities in other categories and channels to address consumer demands,” he added.

The group achieved third quarter sales of $604 million, slightly higher than the previous year. US subsidiary Del Monte Foods Inc (DMFI) contributed $450.6 million or 75 percent of group sales.

US sales declined by 3 percent year-on-year, attributed by the group to the continued weakness in the canned fruit industry, lower sales of regional brands in the packaged vegetable category across retail and foodservice due to supply-related issues, and lower sales of private label.

For the first nine months of its fiscal year 2017, the group generated sales of $1.7 billion, down by 2 percent year-on-year, likewise due to lower US sales.

Last February, DMPL extended its $350-million facility agreement with BDO Unibank Inc for two years.

DMPL intends to refinance the BDO loan through the issuance of preference shares. The proposed issue will be up to $360 million – with an initial tranche of up to $250 million and the balance issuable within three years – which is seen to improve its debt metrics. —DORIS DUMLAO-ABADILLA