Del Monte H1 losses ballooned to $53.6M

Losses at Campos-led canned food maker Del Monte Pacific Ltd. ballooned by 160 percent in the first half of its fiscal year that ended on Oct. 31, due mainly to higher costs in its US subsidiary as well as interest expenses.

In a stock exchange filing on Wednesday, Del Monte said its net loss for the May-October semester widened to $56.3 million from $21.6 million in the same period last year.

READ: Del Monte drops India unit for stake in another food brand

Meanwhile, Del Monte Philippines posted a 78-percent surge in its net profit, which reached $40 million.

Overall sales during the period rose by 4 percent to $1.2 billion, buoyed by Philippine sales, which jumped by 14 percent.

The US business under Del Monte Foods Inc. (DMFI) remained weak as it declined by 2 percent.

In the second or August-October quarter alone, the group more than doubled its net loss to $22.2 million, still due to lower gains from DMFI.

Profit driver

Del Monte Philippines remained its main profit driver, with the segment nearly doubling profits to $20 million.

The local business’ net sales rose by 5 percent to $113.5 million on growth in the beverage and packaged fruit categories.

“We are encouraged by the robust performance of Del Monte Philippines, which reflects our effective strategies and market engagement,” Del Monte chief operating officer Luis Alejandro said.

“However, we acknowledge the challenges faced by our US business and are committed to addressing these issues,” added Alejandro, who is concurrently president and COO of Del Monte Philippines.

Overall, sales in international markets in the August-October quarter went up by 43 percent, driven by higher fresh pineapple and processed products.

China, South Korea and Japan delivered higher volumes. Meanwhile, DMFI’s sales went down by 3 percent.

Debt reduction

To recoup its losses, Del Monte has been selling some of its assets in the United States while raising capital.

“The group intends to utilize the proceeds from these transactions and lower inventory levels to reduce debt in [fiscal year] 2025 [which ends on April 30],” Del Monte said in its disclosure.

By next year, the company plans to lower its inventory levels by 30 percent by cutting its production. In the second quarter, Del Monte slashed its inventory by $269 million.

Earlier this year, Del Monte said it was expecting to still end the current fiscal year with a net loss, although this is expected to lessen in the next two years.

Last month, the group swapped its stake in Del Monte Foods Pte. Ltd. ( or Del Monte India) for a direct shareholding in another consumer food product company based in India.

This formed part of plans to explore more opportunities in Asia’s most populous country in an effort to return to profitability, Del Monte said.