Del Monte Philippines stays strong, unaffected by US unit's bankruptcy

MANILA, Philippines — Del Monte Philippines Inc., known for its canned pineapples and tomato sauce, is not part of the bankruptcy filed by Del Monte Foods Holdings Limited in the United States.

Del Monte Foods and Del Monte Philippines are subsidiaries of Del Monte Pacific Limited (DMPL), a Singapore-based company largely owned by the Filipino-Chinese Campos family.

When Del Monte Pacific announced on July 2 that its US unit had filed for chapter 11 bankruptcy, it also clarified that its Philippine operations and other Asian businesses remain financially sound. 

“DMPL’s subsidiary, Del Monte Philippines Inc. (‘DMPI’), with its Asian and international businesses, continues to perform well with resilient consumer demand, supported by a strong and stable supply chain,” the parent company said in a statement. 

Despite the restructuring and possible asset sale of Del Monte Foods, Del Monte Pacific remains confident in sustaining its operations.

A March financial statement also shows that Del Monte’s Asia-Pacific operations, most of which come from the Philippines, generated $36.1 million (P2.04 billion) in operating income over the three-month period ending January 31.

In contrast, Del Monte’s US, Canada and Mexico sales posted an operating loss of $7.34 million (P414.57 million) during the same three-month period — a sharp decline from the $3.87 million (P224 million) profit posted in the comparable quarter last year.

However, over the nine months ending January, the net loss was nearly double the last reported quarter, reaching $13.53 million (P763 million).

Del Monte Pacific attributed the losses of its operations in the Americas segment to lower sales and rising expenses, including higher production costs due to unfavorable fixed cost absorption, as well as increased warehousing and transfer freight costs.

Due to the financial strain it has suffered, the US unit’s newly appointed board has moved to restructure Del Monte Foods through a restructuring support agreement with lenders. 

The agreement involves the potential sale of the company or most of its assets, leading to the Chapter 11 bankruptcy filing on July 1. This gives the company legal protection as it works through its financial obligations. 

To sustain operations during this period, Del Monte Foods and some of its subsidiaries obtained $912.5 million in debtor-in-possession financing, a special loan granted during bankruptcy to cover a firm’s ongoing expenses while addressing its existing liabilities and obligations.

Del Monte Pacific said it is currently consulting with auditors to assess the potential financial impact of the bankruptcy filing. However, it does not expect any disruption to its operations outside the United States.