DUAL listed fruit canner Del Monte Pacific Limited (DMPL) reported a 70 percent decline in net income in the first half of its fiscal year ending April 2017 on the absence of a one-time gain that boosted earnings in the same period last year.
In a disclosure to the Philippine Stock Exchange (PSE) on Tuesday, DMPL said that for the first six months ending October, “the Group generated a net income of US$11.4 million, lower than prior year period’s US$37.1 million which included a net one-time gain of US$30.4 million mainly from DMFI’s retirement plan amendment of last year.”
DMFI or Del Monte Foods Inc. is the group’s US subsidiary. The group’s financial year runs from May to April.
During the first half, DMPL said it generated sales of $1.1 billion, down 4 percent from the prior year, on lower sales from the US partly offset by robust sales in Asia.
Excluding the one-off items last year, the group’s recurring or core net income for the first half of FY2017 would have been $15.1 million, more than double than the $6.9 million recorded in the period last year, the company said.
Inclusive of one-off items, it said net income in the second quarter (August to October 2016) fell by more than half to $20.2 million from $47.8 million a year ago, while recurring net income rose 33 percent to $21 million from $15.8 million in the same quarter in 2015.
It said second quarter sales dipped by 5 percent to $636.2 million due to lower sales of US unit DMFI, which accounted for 78 percent of group sales and contributed $493.3 million in revenues.
The group said DMFI’s sales declined due to lower inventory builds on packaged vegetable and plastic fruit cup, the continued impact of unsuccessful low-margin US Department of Agriculture bids in the second half of fiscal year 2016, and the reduced sales in private label and foodservice business lines.
As part of the group’s deleveraging plan, DMPL said it aims to issue its planned $360 million preferred share sale on the PSE early next year, which will be the country’s first dollar denominated issue.
The company said it has already secured approvals from the Philippine Securities and Exchange Commission and the Bangko Sentral ng Pilipinas but is still awaiting the go signal of the PSE to issue the dollar-denominated securities.
The company has said it will issue an initial $250-million tranche early next year and the balance within the three-year shelf period.Earlier, Ed Francisco, president of BDO Capital & Investment Corp., lead underwriter of the issue, said the preferred share sale will likely start in January.
DMPL is a fruit canner listed on both the Singapore Exchange Limited and the PSE. It owns the leading brand Del Monte across food and beverage categories in the Philippines, Asia, the Middle East and the United States, as well as in India via joint venture firm FieldFresh Foods with one of India’s largest conglomerates Bharti Enterprises.