Del Monte Pacific Eyes Asset Sale Amid Strong Q1 Earnings

MANILA, Philippines — Del Monte Pacific Ltd. (DMPL), listed in Singapore and the Philippines, is poised to sustain profitability through fiscal year 2027, following a near tripling of earnings in the first quarter. The company reported a net profit of $16.1 million for the quarter ending July 31, a significant jump from $5.5 million in the same period last year. This improvement was attributed to stronger sales, expanded gross margins, enhanced operating income, and reduced financial costs. Total sales reached $222.1 million, a nine percent increase from $203.7 million in the prior year's comparable quarter. The growth was primarily fueled by robust international market sales. International sales surged by 21.4 percent to $118 million during the period, propelled by higher volumes of fresh pineapple, packaged goods, and not-from-concentrate juices. The Philippine market, while showing a 2.2 percent improvement in peso terms, saw a 6.9 percent decline in dollar terms due to the peso's weakening against the dollar, generating sales of $82.6 million. DMPL noted that while sales grew due to measured price increases in an inflationary environment, consumer impact from economic volatility, partly linked to the US-Iran war, led to softened volumes in the group's core segments. Despite strong profitability, DMPL stated it cannot declare dividends due to its negative equity position. As of the end of July, the company reported a net capital deficit of $578.5 million. This was largely due to revolving loans extended by local partner banks, resulting in current liabilities exceeding current assets by $609.7 million. DMPL acknowledged that the capital deficit at the holding company level, primarily stemming from the impairment of its former US subsidiary, does not fully reflect the financial strength and operational capacity of its core Philippine business. However, it also stated that the performance of Del Monte Philippines Inc. alone is insufficient 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," the company stated. To address the group's obligations and improve the standing of its creditors and other stakeholders, DMPL indicated that a combination of measures, including debt restructuring, operational initiatives, asset monetization, shareholder support, and other capital measures, would be necessary. As part of this process, the group is exploring the divestment of certain assets to simplify its business structure and generate liquidity. Looking ahead, DMPL remains focused on growing its Asian operations to drive long-term growth and profitability. The group anticipates maintaining profitability in fiscal year 2027, although it acknowledges the operating environment remains challenging. Management expressed confidence that a combination of a strong underlying business, targeted operational improvements, and a disciplined restructuring plan will position the group for sustainable long-term growth.