Del Monte pitches public listing of PH, US units
Campos group-led consumer giant Del Monte Pacific Ltd. (DMPL) is in talks with banks to bring to public hands two of its biggest businesses operated by its subsidiaries in the Philippines and the United States.
In a regulatory filing on Wednesday, DMPL said increasing the group’s cash flow would allow it to retire more debt. It said it could do so via the planned initial public offering (IPO) of its subsidiaries, Del Monte Philippines Inc. (DMPI) and Del Monte Foods Inc. (DMFI).
“The company is in discussions with banks for these proposed IPOs subject to market conditions. This is expected to generate substantial cash for debt repayment,” it said.
Market volatility
DMPL has long been planning to sell its local unit, DMPI. Registration statements had been filed, but the offerings were scrapped twice, in 2018 and in 2021. In both cases, the group cited market volatility as the deal breaker.
It also stated that the IPO of its American unit, DMFI, was in the cards. The acquisition of Del Monte’s US consumer business under DMFI in 2014 allowed the group to break into the American market and reunite with its mother brand but it also increased its debt burden.
The group has since then raised fresh financing through a mix of equity and new debt and shut down unprofitable US segments to strengthen the balance sheet.
As of end-April, DMPL’s shareholders’ equity stood at $494 million. Its net debt is equivalent to 4.4 times its cash flow, improving from the 14.1 multiple in 2018.
No decline in demand
For fiscal year 2023, the group said it had started to implement plans for price increases to cover production costs. “Our strategic pricing actions combined with our disciplined approach to cost reduction are expected to help us to at least maintain our profit margins,” the company said.
DMPL reported the group had not experienced a decline in demand, particularly in the US business, following its pricing actions. Market share has even grown for eight successive quarters “on the back of trusted quality products, strong commercial execution, increased distribution of core products and new product expansion, all supported by superior supply chain service,” it said.
In the Philippines, DMPL said the impact of price increases varied depending on the category and product.
