Del Monte Pacific reports higher 1Q earnings of US$3 mil on one-off gain

Del Monte Pacific reports higher 1Q earnings of US$3 mil on one-off gain

PC Lee
12/09/18, 10:00 pm

SINGAPORE (Sept 12): Del Monte Pacific reported a 1Q19 earnings of US$3 million ($4.1 million). This is higher than US$0.7 million in 1Q18 and was the result of a one-off gain from the purchase of DMFI loans.

The group had purchased US$99 million of DMFI loans at a discount in the secondary market, which further lowered group debt, reduced interest expense and trimmed gearing to 2.5x equity from 3x last year.

Excluding one-off items of US$6.8 million post-tax, the group would have incurred a net loss of US$3.7 million versus a profit of US$1.2 million in the prior year period due to lower sales in the US, lower exports of processed pineapple, significantly lower pineapple juice concentrate (PJC) prices and higher product costs that were partly offset by price increase in the Philippines and lower trade spend in the US.

The group generated 1Q19 sales of US$437.2 million, 8% lower than prior year quarter mainly due to lower sales in the US and lower exports of processed pineapple products.

DMFI contributed US$308.3 million or 71% of group sales. DMFI sales declined by 8% due to lower volume across categories, mostly from branded tomato products and private label, as well as lower pricing in foodservice for PJC. The decline in sales was in line with DMFI’s strategy to deprioritise non-profitable businesses including private label.

DMFI also booked additional one-off expenses of US$8.4 million in the first quarter of FY2019, mostly for the underperforming Sager Creek vegetable business in FY18.

Sales in the Philippines domestic market were flat in peso terms and down 5.3% in US dollar terms due to peso depreciation.

Sales of the S&W business declined in the first quarter mainly due to lower sales in North Asia and Turkey. Increased competition from cheaper canned pineapple products from Thailand and Indonesia continued to impact S&W’s business. But despite lower sales, the S&W business was able to deliver higher operating profit and a 5.5 percentage point increase in operating margin due to lower costs.

Barring unforeseen circumstances, the group expects to be profitable in FY19 on a recurring basis. The group says it will continue to grow its branded business and reduce non-strategic, non-branded business segments. The group will also continue to review its manufacturing and distribution footprint in the US to improve operational efficiency, further reduce costs and improve margins.

Year to date, shares in Del Monte Pacific have fallen almost 40% to 17 cents on Wednesday close.

Singapore's housing dilemma: What are the broader implications?

SINGAPORE (Sept 17): In the past year and a half, the issue of the 99-year leases on Housing & Development Board (HDB) flats has triggered much debate. Now might be a good time to step back and examine what exactly has changed as a result of this debate and what the broader implications are. In fact, this issue could be a major game changer in many areas. Certainly, housing market dynamics will change, there could be shifts in savings behaviour and we are also likely to see major policy changes over time. These are big changes and it is important that Singaporeans have a clear understandin....

Najib to be charged tomorrow for RM2.6 bil in accounts

SINGAPORE (Sept 19): Malaysia’s former prime minister Najib Razak has been arrested today in connection to RM2.6 billion ($860 million) of 1MDB funds deposited into his personal account. According to a press release issued by the Malaysian Anti-Corruption Commission (MACC), Najib was arrested earlier today at 4.13pm at the MACC headquarters in Putrajaya. The former premier will be brought to the Kuala Lumpur Sessions Court tomorrow (Sept 20) at 3.00pm to face “several charges” under Section 23(1) of the MACC Act. The MACC also said that it will cooperate with the police to recor....

HNA explores sale of newly acquired CWT logistics unit

HONG KONG (Sept 19): China's HNA Group is in talks with banks to find a buyer for its CWT logistics unit, nine months after it acquired the Singaporean business in a US$1 billion  ($1.4 billion) deal, several people familiar with the matter told Reuters. See: CWT receives formal US$1 bil takeover offer from HNA See: HNA to face $3.1 bil liquidity crunch this quarter See: HNA's fire sale gets into full swing from Hong Kong to London See: HNA Group co-chairman Wang Jian dies after accident in France The sale, if completed, would be the latest in a series of divestments aimed ....