PHILIPPINE food and beverage manufacturer Del Monte Pacific was deeper in the red with a net loss of US$76.7 million for the fourth quarter of FY2024 to April, compared with US$11.9 million red ink for the year-ago period.
The company attributed the performance to higher variable product and waste cost, and warehousing and distribution costs related to the high inventory level of its US subsidiary, causing its gross profit margin to drop to 10.3 per cent from 20.2 per cent for Q4 FY2023.
The US subsidiary contributed to 70 per cent of the group’s revenue, according to the results Del Monte Pacific filed to the Singapore Exchange on Friday (Jun 28).
Severance pay and professional fees incurred by the US subsidiary as well as increased interest expense also weighed on the group’s bottom line. Its interest expense amounted to US$53.8 million, up 16.7 per cent year on year.
In per-share terms, the net loss was US$0.0395 for the quarter, while loss per share for the fourth quarter of FY2023 was US$0.0061.
Sales inched up 2.2 per cent year on year to US$597.3 million, boosted by higher exports of fresh and packaged pineapples.
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It posted a net loss of US$127.3 million for FY2024 against a net profit of US$17 million for FY2023. Sales amounted to US$2.4 billion, up 6.4 per cent, driven by higher sales in the US and higher exports of fresh pineapples to China and South Korea.
Del Monte Pacific expects to continue to make a loss for FY2025, albeit a smaller one.
As at end-April, the group had a gearing of 8.9 times and net debt stood at US$2.28 billion, compared with 5.8 times and US$2.25 billion, respectively, as at end-April 2023.
“While overall debt level did not significantly increase from prior year due to better working capital management, Ebitda (earnings before interest, tax, depreciation and amortisation), and consequently net income, significantly decreased driven by higher cost and debt servicing… which also reduced total equity resulting in increased leverage,” Del Monte Pacific said.
Meanwhile, it is planning to dispose of selective assets, as well as obtain injection of equity through strategic partnerships.
It is also working to improve its gross margins from the second half of FY2025 as “the group will still be carrying over high inflationary costs from FY2024 in the first half, particularly in the US”.
Such measures include reducing inventory, inventory write-offs, and warehousing and distribution costs in the US, consolidating manufacturing facilities in the US as well as downsizing its workforce.
It is not paying a dividend for FY2024 because of the net loss, whereas shareholders were rewarded US$0.0013 per share as final dividend in FY2023.
Del Monte Pacific shares closed S$0.003 or 3 per cent higher at S$0.103 on Friday, before the results were announced.
