Del Monte posts $40.4M in net loss

Campos family-led food conglomerate Del Monte Pacific Ltd. (DMPL) booked a net loss of $40.4 million in the nine-month period ending January, reversing the performance a year ago when it posted a net profit of $21.5 million.

The loss was due to one-off expenses from the shutdown of underperforming US plants and the write-off of deferred US tax assets.

Excluding one-off items, the group would have generated a net income of $14.9 million in the first three quarters of its fiscal year, DMPL told the Philippine Stock Exchange yesterday.
For the quarter ending January 2018 alone, the group incurred a net loss of $38.4 million versus a net income of $8.5 million in the same period a year ago. Taking out one-off expenses, net income would have been $3.4 million.

In the third quarter, DMPL had to write off $39.8 million in deferred tax assets in the US due to the change in US Federal income tax rate from 35 percent to 21 percent. But DMPL said this should be “more than offset by the reduced tax rates in future years which will be substantial.”

Total one-off expenses for the third quarter amounted to $41.8 million post-tax. Following the second quarter divestment of the underperforming Sager Creek vegetable business, US unit Del Monte Foods Inc. (DMFI) posted an additional one-off expense of $6.8 million in the third quarter.

The group posted third quarter sales of $599.8 million, down 0.7 percent from year-ago level. Higher sales in the United States and Philippines were offset mainly by lower pineapple juice concentrate prices and decreased exports of processed pineapple.

As planned, DMFI made strategic investments in trade spending and marketing to strengthen its core business in the United States, which is reflected in the higher volume achieved.

“Our innovation and marketing initiatives, to build relevance through product differentiation, address consumer trends and expand distribution in key growth areas, especially in the United States are beginning to pay off,” said Joselito Campos Jr, managing director and CE) of DMPL.

“We are also focused on reducing our debt and on streamlining operations to become more competitive. Such measures are geared to work in tandem with revenue-enhancing initiatives to ensure a profitable and sustainable business in the long run,” he added.

For the first nine months, the group generated sales of $1.7 billion, marginally lower than previous year’s level as higher sales in Asia were offset by lower sales in the US.

The group’s second largest subsidiary, Del Monte Philippines Inc. (DMPI), generated sales of $420 million, up 8 percent from year-ago level. DMPI’s sales cover Philippines sales and exports under the S&W brand and private label.

Sales of the S&W business, the fastest growing business of DMPI in Asia and the Middle East, grew in the nine-month period, driven by robust sales of fresh pineapple, new product launches in new packaging formats in North Asia, and expansion into Turkey.
The group announced earlier the planned debut of DMPI on the Philippine Stock Exchange, by offering to the public 20 percent of its stake in this unit. —DORIS DUMLAO-ABADILLA