LISTED fruit canner Del Monte Pacific Ltd. expects to remain profitable in fiscal year (FY) 2017 after overcoming challenges and losses in its FY 2016.
Del Monte’s fiscal year starts in May and ends in April the following year.
“With the return to profitability in FY 2016, the group has successfully laid a foundation from which it will execute its strategies and growth plans. Barring unforeseen circumstances, the group will continue to be profitable in FY 2017, continuing the improvements achieved in FY 2016,” the company said in its quarterly report posted on the Philippine Stock Exchange (PSE) website.
“The group sees opportunities in food service or institutional accounts and e-commerce, and will be accelerating its business development in these channels,” it added.
The company posted losses in the first few months of the previous fiscal year as earnings were pressured by manufacturing issues of its US operations as well as the dry spell brought about by El Niño.
The company said it expects its US-based arm Del Monte Foods Inc (DMFI) to be profitable in the current fiscal year “on the back of cost saving initiatives and operational improvements.”
“DMFI’s Sager Creek business experienced manufacturing issues in FY 2016 which impacted the overall US company’s margins. DMFI’s manufacturing team has already addressed these inefficiencies at Sager Creek, closing one of the two manufacturing plants and integrating DMFI best practices into the other,” Del Monte said.
It said DMFI’s fruit and vegetable products will continue to cater to its consumers who are health conscious and concerned about food ingredients and packaging safety.
It added it will continue to expand its branded products in Asia via the Del Monte brand in the Philippines where Del Monte is a dominant market leader.
Its brands under S&W—both packaged and fresh products—are seen to continue gaining more traction as it leverages its distribution expansion in Asia and the Middle East, while its FreshField joint venture in India should continue to generate higher sales.
The group is also growing its S&W business through expansion of distribution lines, partnering with food service companies, exploring the e-commerce channel, and increasing its beverage portfolio in its markets.
For its Philippine and Indian operations, Del Monte said it will focus on expanding in the food service market to take full advantage of the growing food service industry in these two countries.
In the Philippines, the group will look for opportunities in “forging strategic tie-ups with key food service accounts, particularly on beverage expansion and culinary meal inclusion.”
For its Indian venture, Del Monte said it will also focus on the penetration and reach of its mayonnaise and ketchup products in retail, especially in the culinary segment.
“As one of the most widely distributed brands in the business-to-business space, FieldFresh will also continue to leverage its considerable strength in the food service segment by regular introduction of new products,” the company said.
As part of its deleveraging plan, Del Monte plans to issue dollar-denominated perpetual preference shares within calendar 2016, to be listed at the PSE.
The company said it will issue an initial tranche of up to $250 million perpetual preference shares this year, while the balance of $100 million will be issued within three years.
DMPL owns the leading brand Del Monte across food and beverage categories in the Philippines, Asia, Middle East and the US, as well as in India via joint venture firm FieldFresh Foods with one of India’s largest conglomerates, Bharti Enterprises.