Del Monte posts strong Q1 results, mulls asset sale

MANILA, Philippines — Singapore and Philippine-listed Del Monte Pacific Ltd. (DMPL) expects to sustain profitability in fiscal year 2027, after earnings nearly tripled in the first quarter.

DMPL reported a net profit of $16.1 million in the quarter ending July 31, up from last year’s $5.5 million, as a result of stronger sales, gross margin expansion, improved operating income and decreasing financial costs.

Sales reached $222.1 million, a nine-percent increase from $203.7 million in the same quarter last year, driven primarily by robust international market sales.

Higher volume of fresh pineapple, packaged products and not-from-concentrate juice boosted international sales by 21.4 percent to $118 million during the period.

The Philippine market, for its part, generated sales of $82.6 million, a 2.2-percent improvement in peso terms but down by 6.9 percent in dollar terms due to the weakening of the peso against the dollar.

While sales grew in the inflationary environment due to measured price increases, DMPL said volume softened in the group’s core segments as consumers were affected by economic volatility caused by the US-Iran war.

However, despite strong profitability, DMPL said it cannot declare dividends because of its negative equity position.

As of end-July, DMPL reported a net capital deficit of $578.5 million.

The group’s current liabilities exceeded its current assets by $609.7 million, mainly due to revolving loans historically extended by local partner banks.

DMPL said management recognizes that the capital deficit at the holding company level, arising principally from the impairment of its former US subsidiary, does not fully reflect the financial strength and underlying operating capacity of DMPL’s core Philippine business.

At the same time, it said the performance of Del Monte Philippines Inc. alone is not sufficient to address the group’s total liabilities of $1.2 billion or the negative equity at the DMPL level of $579 million.

 “No equity raise, by itself, is expected to turn DMPL’s equity position to positive,” it said.

To address the group’s obligations and improve the position of its creditors and other stakeholders, DMPL said a combination of measures, including debt restructuring, operational initiatives, asset monetization, shareholder support and other capital measures, would be required.

DMPL said the group is exploring the divestment of certain assets as part of this process to simplify the business structure and generate liquidity.

Looking ahead, DMPL said it remains focused on growing its Asian operations to drive long-term growth and profitability.

“The group expects the business to maintain profitability in fiscal year 2027, although the operating environment remains challenging,” DMPL said.

“Management is confident that the combination of a strong underlying business, targeted operational improvements, and a disciplined restructuring plan will position the group for sustainable long-term growth,” it said.