Del Monte net loss widens to $23.9M

MANILA, Philippines - Food processing giant Del Monte Pacific Ltd. (DMPL) said its net loss widened in the first three quarters of its 2015 fiscal year due to expenses incurred in line with a US acquisition it made last year.

DMPL registered a net loss of $23.9 million in the May to January period (first nine months of its 2015 financial year), 10 percent higher than the $21.7-million net loss it reported during the first half.

The company, however, managed to  book a net income of $29.7 million before acquisition-related and other non-recurring expenses with sales during the nine-month period reaching $1.6 billion.

 “We look forward to sustaining our growth in the coming quarters, as we execute against proven strategies and new growth driven initiatives,” said Joselito D Campos Jr., chief executive officer and managing director of DMPL.

For the November 2014 to January 2015 period alone, DMPL said sales stood at $637.6 million, of which DMFI generated $511 million.

DMPL, however, posted a net loss of $2.2 million during the third quarter as it reflected higher interest expenses related to the Del Monte Foods Inc. (DMFI) acquisition as well as earlier announced acquisition-related expenses pertaining to purchase accounting and inventory step-up.

DMPL said the group incurred higher interest expense as a result of the long-term loan to acquire DMFI and the short-term bridge financing of the company.

The firm said approximately $150 million of short-term bridge financing will be repaid using the proceeds from the recent oversubscribed rights issue while $350 million of short-term bridge financing has been extended for up to two years.

“We are encouraged by the strong support of our shareholders to the rights offer which was oversubscribed. Deleveraging DMPL’s balance sheet and undertaking an international offering of perpetual securities when market conditions improve remain a key priority,” Campos said.

DMPL in February last year completed the acquisition of DMFI for nearly $1.7 billion, jumpstarting the transformation of the former into a global branded food and beverage firm.

The company said sales in the US market in the third quarter rose 21 percent year-on-year as Philippine products introduced in the US under the Del Monte label continued to gain ground and the development of the Asian ethnic business in the US performed better than expected.

“We are on track to deliver future growth, having stabilized the business with the initiatives taken post-acquisition, which include reverting back to competitive pricing levels, reintroducing the well recognised classic Del Monte label and reinstating trade support levels. We will continue to explore acquisition opportunities that will complement our strategy and enhance our market leadership across our product range,” said Nils Lommerin, chief executive officer of DMFI.

DMPL’s branded business in Asia composed of Del Monte in the Philippines and the Indian subcontinent, and S&W in Asia and the Middle East, generated sales of $136.2 million, up 10 percent year-on-year.

DMPL is a publicly listed company in both the Philippines and Singapore.