Del Monte Pacific Limited (DMPL) reported a net loss of $30.5 million for the first quarter, ending July 31 of its fiscal year 2023, a 267 percent fall from its net profit of $18.3 billion in the same period last year.
In a disclosure to the Philippine Stock Exchange, DMPL said the loss is primarily due to a one-off cost of $71.9 million or $50.2 million post tax incurred in the early redemption of notes.
In May 2022, subsidiary Del Monte Foods Inc. raised $600 million through a 7-year Term Loan B facility with a floor of 0.5 percent plus 4.25 percent per annum, to primarily redeem the $500 million Senior Secured Notes which had an interest rate of 11.875 percent per annum.
“The much lower interest rate, currently at 6.45 percent p.a., is expected to result in about $20 million to $30 million interest savings per year,” DMPL explained.
Without the one-off cost, DMPL would have generated a net profit of $19.6 million, 7 percent higher than a year ago, as DMFI would have generated a net profit of $8.0 million, 67 percent higher on lower interest expense.
“Achieving organic profit growth amidst global turmoil and uncertainties underlines the strength of our business model and the strategies we have in place for future growth,” said DMPL Managing Director and CEO Joselito Campos, Jr.
He added that, “We remain relentless in pursuing initiatives that will generate sustainable sales and profit while proactively dealing with cost inflation.”
“Our focus is to continue to manage expenses across every sector of the Group and constantly monitor financial markets to seize opportunities to lower our financing cost while strengthening our balance sheet,” Campos noted.
DMPL generated sales of $456.6 million, slightly behind year ago by 1 percent as better performance in the USA and international markets was offset by lower revenues in the Philippines.
The Group’s US subsidiary DMFI achieved sales of $302.4 million or 66 percent of Group turnover. DMFI’s sales increased by 1.5 percent on the back of higher retail branded sales of canned vegetable, tomato, broth and Joyba bubble tea.
International markets, led by S&W brand, delivered strong sales growth of 16 percent to $85.6 million as fresh sales rose 20 percent driven by stronger demand particularly in North Asia and better supply.
Sales also benefitted from continued favorable consumer and trade response to the naturally-ripened extra-sweet S&W Deluxe variant.
The Philippine market generated sales of $75.3 million, 10 percent lower in peso terms amidst an inflationary market and 18 percent lower in US dollar terms due to the peso depreciation.
Beverage declined as consumers shifted preference to more indulgence drinks, with sales of multi-flavored juice drink large packs growing 12 percent, albeit not enough to offset the decline of 100 percent pineapple juice.
Packaged pineapple market share increased, but volume of mixed fruits was negatively affected by lower dessert consumption which consumers deprioritized.
Sales were also temporarily impacted by transition to new distributors for better reach, downline availability and more sustainable growth.
New innovations in dairy and snacking are gaining traction, now accounting for 8 percent of Philippine sales.
Foodservice sales rose 20 percent with increased dining out. Convenience stores also started to fully re-open, with first quarter sales up by 39 percent in this channel.