CAMPOS-led Del Monte Pacific Ltd., which is listed both at the Philippine and Singapore stock exchanges, said it posted a loss during its fiscal third quarter ending January on one-off items, as it needed to close down some of the facilities in the United States while sales were down.
The company said it suffered an attributable net loss of $38.36 million for the quarter alone, from the previous $8.53 million in income. This brings its losses for its fiscal nine months to $40.44 million, from the previous year’s $21.45 million.
The company said it booked the closure of its plants in North Carolina, Sager Creek Arkansas and Plymouth, Indiana, while also paying for the severance of its respective employees.
“The group wrote off $39.8 million of deferred tax assets at DMFI [Del Monte Foods Inc., its US unit] due to the change in federal income tax rate to 21 percent from 35 percent,” the company said. “Other companies in the US with deferred tax assets have similar write-offs due to the reduction in income tax rates. However, this should be more than offset by the reduced tax rates in future years, which will be substantial.”
Stripping out the one-off items, it booked an income of $3.4 million, still 70 percent lower than the previous year’s $11.64 million.
“Our innovation and marketing initiatives, to build relevance through product differentiation, address consumer trends and expand distribution in key growth areas, especially in the United States are beginning to pay off,” Joselito D Campos Jr., the company’s managing director and CEO, said.
“We also are focused on reducing our debt and on streamlining operations to become more competitive. Such measures are geared to work in tandem with revenue-enhancing initiatives to ensure a profitable and sustainable business in the long run,” he said.
For its fiscal nine months, the company generated sales of $1.69 billion, lower than the prior year’s $1.7 billion, as higher sales in Asia were offset by lower sales in the US, where three quarters of the company’s revenues come from.
Del Monte Philippines Inc. generated sales of $420 million, up 8 percent in peso terms and 2 percent in US dollar terms versus the same period last year.
The sales comprise Philippines sales and exports, under the S&W brand and private label.
The Philippine market sales for the first nine months were higher as the group continued to invest in driving inclusion of Del Monte products in consumers’ weekly menu behind 360-degree campaigns across brands, it said.
Food-service sales in the Philippines also continued to expand, riding on the rapid expansion of quick-service restaurants and convenience stores.
Sales of the S&W business, the fastest-growing business of DMPI in Asia and the Middle East, grew in the nine-month period, mainly driven by robust sales of fresh pineapple, new product launches in new packaging formats in North Asia, and expansion into Turkey, a new market for packaged products.
The US unit Del Monte Foods Inc. generated $1.3 billion, or 75 percent of group sales, lower by 1.6 percent largely driven by distribution losses in the tomato category, unfavorable pricing in foodservice and higher trade promotion spending, the company said.