Del Monte Pacific posts Q2 net loss of US$37.4m after earlier warning

MAINBOARD-LISTED food and beverage company Del Monte Pacific, which is known for its sauces, juices and tinned fruits, posted a net loss for the second quarter to Oct 31, as it had warned.

The group slipped into the red to the tune of US$37.4 million for the three months, according to results released on Friday evening, reversing the net profit of US$8.43 million in the year before.

The loss came as revenue inched up by 0.4 per cent to US$558.7 million, as lower sales in the United States sapped the uplift from the Philippines and the "S&W" brand's business in Asia.

The fall took place at the lower-margin Sager Creek vegetable business, which has been divested, and a pullback in the low-margin, non-branded business units, as the group doubles down on growing its branded business - such as by swopping industrial pineapple juice concentrates for consumer drinks.

Overall, the group clocked loss per share of 2.18 US cents, against earnings per share of 0.18 US cent previously. Net asset value dipped to 23.1 US cents a share from 29.28 US cents.

Del Monte, which was also loss-making in the first quarter, had warned on Nov 19 that it expected to report a loss on one-off expenses at a key subsidiary.

US-based Del Monte Foods Inc - which is responsible for almost three-quarters of the group's sales - rang up these expenses on the closure and sale of four of its 10 US plants in an "asset-light strategy" that could yield up to US$60 million in cost savings over two years.

The group has also said that it is looking into refinancing Del Monte Foods' US$1.4 billion in loan facilities that start to fall due in November 2020.

For the six months, dual-listed Del Monte, which is also traded on the Philippine Stock Exchange, racked up a net loss of US$75.6 million, against earnings of US$11.4 million previously. Turnover declined by 5.9 per cent to US$934.6 million.

Chief executive and managing director Joselito Campos, Jr said in a statement that the plant divestment "is a necessary step for us to remain competitive in a rapidly-changing marketplace", as Del Monte pares what it called "non-strategic, non-branded business segments" and continues to review its manufacturing and distribution operations in the US for efficiency.

Del Monte flagged in an outlook statement that its key subsidiary "faces headwinds from the long-term structural decline of canned categories in which it competes".

But as the group mulls e-commerce opportunities and distribution options such as convenience stores and food services, Mr Campos added: "We are maintaining solid market share across legacy categories, while expanding into other new growth categories and channels."

The group affirmed that it expects "to remain profitable in FY2020 on a recurring basis". 

No dividend was recommended for the period, unchanged from the year prior.

Del Monte shares closed up 0.1 Singapore cent or 0.75 per cent to S$0.135 on Friday before the results were released.