SINGAPORE (June 29): Del Monte Pacific (DMPL), the producer of branded fruits and vegetable, juices and condiments, reported 4Q earnings ended April of US$12.3 million ($16.8 million), four times higher than the US$2.9 million in the same quarter last year.
This was a result of the one-off gain from the purchase of DMFI loans at a discount in the secondary market. Excluding one-off items of US$14.3 million, the group said it would have incurred a net loss of US$2.1 million versus a profit of US$17.2 million last year due to lower export sales, significantly reduced pineapple juice concentrate (PJC) prices, and strategic investments in trade spending and marketing to strengthen its core business in the US.
In the fourth quarter, DMPL generated fourth quarter sales of US$499.0 million, 8.5% lower than a year ago. While sales were higher in the Philippines, these were offset mainly by lower, cyclical PJC prices in international markets, decreased exports of processed pineapple, and lower sales in the US. The group has been shifting to more branded consumer beverage given the volatile nature of industrial and commodity PJC.
For the fiscal year ended April, DMPL posted a net loss of US$28 million due to one-off expenses amounting to US$74 million for two plant closures in the USA as part of a planned programme to achieve operational efficiency and reduce cost in its US subsidiary, Del Monte Foods Inc (DMFI), plus the write-off of deferred tax assets due to a change in US tax rates.
With the divestiture of Sager Creek and closure of plants in the US, this will lead to improvement in margins starting FY2019 as well as stronger cash flow through lower inventories. Barring unforeseen circumstances, the DMPL Group is expected to be profitable in FY2019.
Shares in DMPL closed 0.4 cent higher at 18 cents.
