GLOBAL food and beverage company Del Monte Pacific Ltd. (DMPL) said it will be laying the groundwork next year for improved profitability by its fiscal year ending April 2026 through strategic restructuring, inventory management, and supply chain optimization.
At an analyst briefing earlier this month, DMPL executives highlighted efforts to position the business for future success by reducing excess inventory, consolidating manufacturing operations, and implementing cost-saving measures.
“We’re looking at additional assets where the opportunities exist, where we are underutilized and [bear] high costs in our production,” Del Monte Foods Inc. (DMFI) President and CEO Greg Longstreet said.
“In general, we are restructuring and reorganizing to be asset light, a much simpler, smaller organization with less layers of management, increased spans of control, and overall lower operating costs,” he added.
These efforts started last year “with success” and the group is advancing the agenda this year,” Longstreet continued.While contributing to short-term costs, the said initiatives are expected to deliver substantial benefits by the second half of fiscal year (FY) 2026, the company added.
A key achievement has been a $250 million reduction in inventory, aligning with its 30- percent reduction target. This disciplined approach has mitigated financial risks, improved its liquidity, and contributed to a forecast reduction in debt for its US business, it said.
“Our inventory reduction is on track,” Del Monte Group Chief Finance Officer and Chief Operating Officer Parag Sachdeva said.
He added that the group has seen “excess inventory being reduced from 15 million cases to almost 5 [million cases].”
“We are sort of looking at reducing our profit leaks next year substantially, and that will help us get back to improving profitability from FY 2026 onwards,” he added.
DMPL acknowledged the ongoing impact of profit leaks, noting that for the first half of FY 2025 ended October 31, 2024, profit leaks amounted to over $40 million, largely due to incremental trade costs, increased waste, and the sale of near-expired products.
The company is also focusing on supply chain transformation, including asset sales, to streamline operations, a significant part of which is the sale of a tomato plant in the US, which should enhance liquidity and contribute to debt reduction.
DMPL likewise acknowledged the ongoing challenges it faces, including increased warehousing and distribution costs due to excess inventory.
“Our costs include increased storage [and] warehousing, which we have incurred due to excess inventory levels in the last 12 to 18 months, and that’s also being amortized to the P&L (profit and loss)” Parag explained.
DMPL expressed confidence in the benefits of the restructuring efforts, noting that the intentional work to reduce inventory and aging stock is costing more this year, but will position the group for better results next year.
“[There’s] a lot of hard work to transform and turn around the business and the results,” Longstreet said, assuring that the company is “ahead of plan on many objectives, such as gross margin for the quarter and inventory reduction.”
DMPL reported a wider net loss of $56 million for its fiscal first ended Oct. 31, 2024 due to the losses incurred by its US subsidiary DMFI.
These losses offset the strong profit growth achieved by its Philippine business, Del Monte Philippines Inc., which recorded a net profit of $40 million, up 78 percent from the previous year.
Shares of DMPL on Monday were unchanged at P3.81 apiece.
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