Canned food giant Del Monte Pacific Ltd. reported a $127-million net loss during its fiscal year 2024 ending in April on higher costs in its US subsidiary, with the company expecting to remain unprofitable in the next fiscal year.
In a stock exchange filing on Monday, Del Monte said it had incurred $13.3 million in one-off expenses, mostly for severance pay and higher professional fees at California-based Del Monte Foods Inc. (DMFI).
Del Monte came from a net profit of $17 million in the previous fiscal year. Stable sales in the Philippines and the United States kept sales flat at $2.4 billion.
READ: Del Monte’s US units cutting two plants
In the fourth quarter alone, Del Monte’s net loss widened to $77 million from $12 million on “inventory issues.”
“We are extremely disappointed with our performance in the fourth quarter, mainly brought about by inventory issues in the US,” Del Monte managing director and CEO Joselito Campos Jr. said in a statement.
“We will be relentless in improving our operating and financial performance across all businesses, particularly in the US.”
Revenues during the February to April period inched up by 2 percent to $597.3 million on “robust” sales of canned fruit brand S&W’s fresh and packaged pineapple in Asia, offsetting lower sales in the US.
DMFI’s sales went down by 2 percent to $420 million due to the Campos-led firm’s “strategic shift away” from lower-margin products packed for other manufacturers.
Lower packaged fruit sales on declining category trends likewise pulled down DMFI’s revenues.
Meanwhile, the Philippine market registered $68.8 million in sales, up by 3 percent in peso terms and flat in US dollar terms.
“Packaged fruit and beverage generated higher sales on the back of new campaigns, value bundles and re-airing of TV ads,” Del Monte said.
READ: Del Monte Pacific earnings down in fiscal year 2023
To pare its losses, the company said plans for the “selective sale of assets and injection of equity through strategic partnerships” were underway.
Earlier this year, the firm announced plans to close DMFI’s vegetable plants in Wisconsin and Washington to plug losses.
Del Monte will likewise reduce its workforce to further cut costs while investing more in the export business of Fresh, its cut fruits and vegetables unit.
However, Del Monte noted that it still expected to incur a net loss in the next fiscal year, “although at a reduced amount.”
“The group will pursue all these initiatives in FY (fiscal year) 2025, but the results will only be fully reflected in FY 2026,” Del Monte said. —Meg J. Adonis INQ