Del Monte Pacific Profits Fall 83% On One-Off Costs

Del Monte Pacific Limited (DMPL) reported an 83% drop in net income to $16.9 million for its fiscal year ending April 2023 from $100.0 million in the previous year.

Photo Insert: Philippine market sales were up 7 percent in peso terms, but down 4 percent in US dollar terms, on higher culinary, beverage and new product sales.

In a disclosure to the Philippine Stock Exchange, the firm said its loss is due to one-off costs of $55.2 million (post-tax and non-controlling interest), of which $50.2 million was booked in the first quarter as DMFI refinanced its loan with a long-term credit facility that has lower interest rates.

Without these one-off costs, DMPL's EBITDA and net income would have been $337.2 million and $72.2 million, lower by 4 percent and 28 percent, respectively. DMPL grew sales by 3 percent to $2.4 billion on higher USA and international sales.

However, gross profit and EBITDA were down by 2.5 percent and 6.2 percent to $607.0 million and $329.7 million, respectively, on higher costs.

Its US subsidiary Del Monte Foods Inc. generated $1.73 billion of sales or about 72 percent of Group sales, higher by 5 percent driven by sustained growth across almost all categories.

This is attributed to pricing adjustments to mitigate inflation, distribution gains for vegetable club and Joyba bubble tea, increased sales of fruit cups, as well as incremental sales of $35.1 million from Kitchen Basics.

DMFI generated a gross profit of $400.3 million, slightly higher versus last year’s $396.1 million as the company succeeded in offsetting record levels of inflation.

Philippine market sales were up 7 percent in peso terms, but down 4 percent in US dollar terms, on higher culinary, beverage and new product sales, while the international business delivered 11.5 percent higher sales on increased fresh and packaged product sales.

“The Group’s increase in sales and leading market share across core products is an impressive achievement amid a highly challenging inflationary environment. As with most food companies, our margins were under pressure and impacted the Group’s profitability,” said DMPL managing director and CEO, Joselito Campos, Jr.

He added that “We are focused on widening our distribution and expanding our reach into other market segments.”

“We are also paying extra attention to managing costs, minimizing waste by continuously improving processes, and leveraging technology to enhance efficiency and lower expenses. A major priority is to reduce leverage, strengthen our capital structure and bring down interest expense in the coming year,” Campos said.

Barring unforeseen circumstances, the DMPL said it expects to generate a higher net profit in the fiscal year ending April 2024.

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