The Campos family’s Del Monte Pacific Limited (DMPL) is testing the appetite of the overseas market for its plan to raise fresh funds through a dollar-denominated Senior Perpetual Capital Securities Offering.

In a disclosure to the Philippine Stock Exchange (PSE), the firm said the fund-raising activity will be done through Jubilant Year Investments Limited (JYIL), a wholly-owned subsidiary of DMPL’s Philippine subsidiary Del Monte Philippines Inc. (DMPI).

Del Monte said has mandated UBS as Sole Global Coordinator, Lead Manager and Bookrunner to arrange a series of fixed income investor meetings and calls commencing on Feb. 19, 2024. 

“A Reg S US$ Senior Perpetual Capital Securities Offering may follow, subject to market conditions. The issuance will be guaranteed by DMPI, and Philippine Packing Management Service Corporation,” DMPL said.

Last December, DMPL reported a net loss of $21.6 million for the first half of its fiscal year (May to October 2023) from a net profit of $19.0 million in the same period of 2022 due to lower operating results.

The firm said it grew sales by two percent to $1.2 billion on higher USA sales; however, gross profit declined by 28 percent to $243.8 million on higher costs.

Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by 41 percent to $115 million from $194.5 million.

For the second quarter (August to October 2023), DMPL generated sales of $667.1 million, down five percent due to lower sales in the USA by subsidiary Del Monte Foods Inc. (DMFI), and lower exports of fresh and packaged pineapple by DMPI.

Sales in the Philippine market were flat in US dollar terms.

DMFI achieved sales of $494.6 million or 74 percent of group turnover. DMFI’s sales decreased by two percent mainly driven by the strategic shift away from lower-margin co-pack products that it packs for other manufacturers.

Branded products grew by 0.5 percent in the second quarter, due in part to strong performance from the Joyba and Kitchen Basics brands, as well as growth in the foodservice channel.

DMFI grew its leading market share positions across its core businesses of canned fruit, vegetable and tomato with higher-margin branded retail products increasing as a proportion of overall mix.

Growth continued within the foodservice segment, highlighted by the introduction of 4-ounce branded fruit cups, developed and sold specifically for the vending machine and micro market channels.

Its Philippine market delivered sales of $107.8 million, one percent lower in peso terms but flat in US dollar terms. Sales in the culinary and beverage segments experienced growth, driven by the launch of strategic campaigns.

Sales in the international markets declined by 30 percent on reduced Fresh and Packaged product sales. Lower sales of Fresh resulted from a lower supply for the quarter as majority of fruits had matured or ripened early and were thus harvested in the first quarter. The Group expects a strong second half supply and sales recovery.

“We faced a tough quarter as lower pineapple supply, higher costs and consumer spending trends impacted our margins and operating performance. In addition, higher interest charges also affected the Group’s bottom line,” said DMPL Managing Director and CEO Joselito Campos, Jr.

He added that “we expect that consumer spending will continue to be curbed by persistently higher living costs, mainly driven by high energy prices and rising borrowing costs. To address challenging market conditions, we will focus on effectively managing our inventory over the next 9 to 12 months. Additionally, we will explore opportunities to enhance our capital structure, reduce leverage, and minimize interest expenses.”