SINGAPORE (Mar 8): Del Monte Pacific (DMPL) announced a 3Q18 loss of US$38.4 million ($50.5 million) due to one-off expenses, mainly due to a US$39.8 million write-off of deferred tax assets in the US, due to the change in US Federal income tax rate from 35% to 21%.
Without the overall one-off expenses, the group would have posted remained profitable with earnings of US$3.4 million ($4.5 million), down 70.6% from US$11.6 million a year ago on lower operating margin.
DMPL says companies in the US with deferred tax assets have similar write-offs due to the reduction in income tax rates. However, this should be more than offset by the reduced tax rates in future years which will be "substantial".
Turnover for the quarter fell 0.7% to US$599.8 million compared to 3Q17’s restated revenue of US$604.2 million on lower contributions from Asia Pacific, which saw an overall 0.6% fall in contributions to US$140.1 million mainly due to a 19% decline in contributions from packaged fruit.
Nonetheless, the group notes that its US subsidiary, Del Monte Foods (DMFI) saw a marginal 0.2% growth in sales with positive sales performance seen for its new products, and higher market shares in the canned vegetable and fruit, plastic fruit cup and broth categories.
DMPL attributes this to increased marketing investments, compelling innovations, and strong execution against fundamentals at retail.
Total one-off expenses for 3Q amounted to US$41.8 million post-tax.
Aside from the aforemetioned write-off of deferred tax assets on a non-cash basis, DMFI also booked an additional one-off expense of US$6.8 million following the 2Q divestment of its underperforming Sager Creek vegetable business.
For 9M18, the group generated a net loss of US$40.5 million compared to its earnings of US$21.5 million a year ago.
“Our innovation and marketing initiatives, to build relevance through product differentiation, address consumer trends and expand distribution in key growth areas, especially in the United States are beginning to pay off,” says Joselito D Campos, Jr, managing director and CEO of DMPL.
“We also are focused on reducing our debt and on streamlining operations to become more competitive. Such measures are geared to work in tandem with revenue-enhancing initiatives to ensure a profitable and sustainable business in the long run,” he adds.
Shares in DMPL closed flat at 25 cents on Wednesday.
