Del Monte Pacific swings back to profit in 9 mths

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CAMPOS-LED fruit canner Del Monte Pacific Ltd. swung to a profit in its fiscal first nine months on the back of a one-off adjustment of $23.4 million after tax as a result of the amendment of the retirement plan of its US unit, Del Monte Foods Inc.
DMPL posted net income of $41.9 million (P1.95 billion) in the nine months to January 2016, a reversal of the $23.9 million loss it incurred in the same period a year earlier.
In a disclosure to the Philippine Stock Exchange (PSE) on Monday, the company, which is both listed in the Philippines and Singapore, said the one-off adjustment boosted its net income for the nine months.
For the year, the company intends to issue US-dollar denominated perpetual preferred shares in the Philippines, which will be listed on the Philippine Stock Exchange.

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“The group anticipates to launch the offering this year subject to regulatory approvals and market conditions. The proposed issue will be up to $360 million that will result in a further improvement of the Group’s leverage ratios,” it said.

Further, Del Monte said it is likely to enjoy a net profit for its full fiscal year, which ends in April, which would be a turnaround from the previous year’s losses after its acquisition of the US unit.

Del Monte said it recorded sales of $1.72 billion for the nine-month period, about 6 percent higher from the $1.63 billion posted during the same period in 2014.

Its US unit, which accounts for 80 percent of sales, generated $1.4 billion in sales, up 8 percent from the same period a year before.

Sales for the third quarter from the US, however, fell by 9 percent to $466 million because of the failure of government and co-pack contract bids.

“In the United States, lower sales to the government and co-pack sectors unfavorably impacted our third-quarter sales and may continue to impact our fourth-quarter sales. We are reviewing our strategy for these channels as part of our long-range plan to optimize sustainable sales and profits for the company in the coming year,” said Joselito Campos Jr., DMPL managing director and chief executive officer.

As a result, the group’s sales for the fiscal third quarter alone, covering November to January, decreased by 7 percent to $594.1 million from the prior year’s $637.5 million.
Meanwhile, its Philippine operations managed to partly offset lower US sales, rising by 6 percent because of the holiday season.

The rest of Asia under the S&W brand was up 35 percent, while China and Japan markets also posted growth on higher sales of canned tropical fruit and fresh fruit.

The group’s gross margin in the third quarter improved to 20.5 percent, up from 19.2 percent in the same period of the previous year, with the absence of purchase accounting inventory step up, significant improvement in productivity as well as cost optimization initiatives.

Meanwhile, company’s share of losses in the FieldFresh joint venture in India declined to $0.3 million from $0.4 million in the prior year period as a result of a 13 percent growth in sales driven by the strong performance of Del Monte’s packaged business, primarily led by improved volume in juices and the culinary segment.

Higher sales and production efficiencies resulted in FieldFresh maintaining its positive earnings before interest, depreciation and amortization trend for the quarter.

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