GLOBAL food and beverage company Del Monte Pacific Ltd. (DMPL) cited lower gross profit margins and higher interest cost as main factors impacting its 2024 operations, as it adopted measures to address losses, in response to questions from The Securities Investors Association.
Its US subsidiary, Del Monte Food Inc. (DMFI), recorded a net loss of $106.4 million, attributed in part to inflation, increased waste from aged items and higher variable product cost.
Also suffering from a “dip in performance” was its Philippine subsidiary Del Monte Philippines Inc. (DMPI), due to a decline in the productivity of processed pineapple products, valued at “almost $23 million, in addition to lower sales.”
DMPL said it has responded to the losses by investing in systems upgrades, processes and people.
“We have implemented new systems that give us more transparency in our sales planning and trade investments, inventory management and materials on hand; upgraded our forecasting process with a more rigorous approach that engages multiple functions to align across a statistical historic model, sales forecasting and a consumption-based model,” the company said.
“In the last 12–18 months, we have brought on board new leaders across multiple functions including commercial, supply chain and operations, who have best-in-class CPG (consumer packaged goods) experience in forecasting, sales planning and inventory management,” it added.
The company likewise disclosed its current leverage is not sustainable, and the board mandated for fiscal year 2024 to include sale of assets at DMFI and raise additional equity at DMPI, which is expected to lower leverage by $300 million by year-end.
DMPL also said it is not inclined to make a rights issue due the company’s current share price.
In July, DMPL Chief Financial Officer Parag Sachdeva said that they were planning to reduce production by 30 to 40 percent, even as low as 50 percent for some of its product line, to balance inventory.
“We are making significant cuts… for fiscal year 2025. For example, in tomatoes, the reduction is between 35 percent [and] 40 percent,” Sachdeva disclosed. “We feel that would allow us to bring the inventory to a reasonable level.”
DMPL is 71 percent owned by NutriAsia Pacific Ltd. and Bluebell Group Holdings Ltd., which are beneficially owned by the Campos family of the Philippines.
Shares of DMPL dropped 2 centavos on Friday, closing at P4.16 apiece.
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