Del Monte Eyes Profitability Amid Debt Restructuring

MANILA, Philippines – Del Monte Pacific Ltd. (DMPL) is poised to remain profitable through fiscal year 2027, banking on its robust Asian operations and strategic restructuring efforts to navigate cost pressures and a significant debt load. The food and beverage giant announced on Tuesday that its underlying business remains strong despite a challenging operating environment. DMPL expects targeted operational improvements and a "disciplined restructuring plan" to underpin its long-term growth trajectory. The company entered fiscal year 2027 on a stronger footing, with net profit from continuing operations nearly tripling to $16.1 million in the quarter ended July, up from $5.5 million a year earlier. Sales grew by 9 percent to $222.1 million, primarily driven by international markets, while earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 25.7 percent to $49.3 million. Gross margin improved to 33.7 percent from 32.5 percent. This improvement came despite softer domestic demand. Philippine sales reached $82.6 million, up 2.2 percent in peso terms but down 6.9 percent in dollar terms due to peso depreciation. DMPL noted that measured price increases supported local sales, although volumes in its core segments remained soft as consumers felt the impact of economic volatility. International sales, meanwhile, jumped 21.4 percent to $118 million, fueled by higher volumes of fresh pineapple, packaged products, and not-from-concentrate juice. The company maintained its significant market share, holding a 54-percent share of the imported fresh pineapple market in North Asia. However, DMPL continues to grapple with substantial financial challenges. A $703-million write-down of its US business at the end of fiscal year 2025 resulted in a group negative equity of approximately $579 million as of July. Its net debt stood at $969.7 million, down 5 percent year-on-year due to loan repayments, but still a considerable figure. DMPL's net debt-to-adjusted EBITDA improved to 5.1 times from 6.9 times. Its net capital deficit also narrowed by $11.3 million to $578.5 million from the end of April. To address its balance sheet, DMPL has initiated integrated restructuring discussions with its principal creditors and other stakeholders, with external financial advisers assisting in developing a framework. The plan aims to address near-term liquidity and maturity pressures, strengthen Del Monte Philippines Inc.'s (DMPI) balance sheet and cash-generating capacity, and establish a sustainable capital structure. Management acknowledged that DMPI's performance alone would not suffice to resolve the group's total liabilities of $1.2 billion and DMPL's negative equity, nor would a single equity raise be adequate. Instead, DMPL anticipates a combination of debt restructuring, operational initiatives, asset monetization, shareholder support, and other capital measures. The group is also exploring the divestment of certain assets to simplify its structure and generate liquidity. Despite its return to profitability, DMPL stated that it would not declare dividends while its capital deficit remains outstanding.