DUALLY listed Del Monte Pacific Ltd. (DMPL) recorded a $21.9 million net loss for the first quarter of its 2015 fiscal year following the full acquisition of its consumer food unit Del Monte Foods Inc. (DMFI).
DMPL, which is listed both on the Singapore Exchange and the Philippine Stock Exchange, said the net loss was due to acquisition-related expenses. Total sales for the quarter, however, improved to $446 million from the previous quarter’s $340 million.
“The costs include higher interest expenses from a long-term loan to acquire DMFI and short-term bridge financing of DMPL, which will be refinanced with an equity offering in the Philippines,” the firm said.
“While first-quarter sales decreased by 1 percent versus the prior year period, this was a marked improvement from the 17 percent decline during the transition period [from] February to April 2014, where sales were affected by inherited higher product pricing and changes to product labels,” said Nils Lommerin, chief executive officer of DMFI.
DMPL fully acquired DMFI in February this year for $1.675 billion. The acquisition is expected to boost the company’s annual profits by $500 million to $2 billion.
DMPL’s planned share sale will be followed by a perpetual preference share offering and a rights offer. The company said this would reduce borrowings by $520 million.
The dual-listed firm will start operating its back-office functions and migrating enterprise resource planning to the SAP system in February next year to improve the company’s gross margin starting in 2016.
DMPL’s brands — Del Monte in the Philippines and India, S&W in Asia and the Middle East — also posted higher gains in the first quarter of the year, to $6.4 million net income and $120.6 million before acquisition costs.
“The Philippine market performed well and the S&W brand has continued its growth momentum in Asia,” said DMPL chief executive officer and managing director Joselito D. Campos, Jr.
“We are also encouraged by the good progress thus far made in the integration of DMFI along with the business development and cost savings initiatives,” he added.
DMPL owns the leading brand Del Monte across food and beverage categories in the Philippines while it has a presence in India through FieldFresh Foods, its joint venture with one of India’s largest conglomerates, Bharti Enterprises.