DEL MONTE Pacific Ltd. (DMPL) has started restructuring discussions with its principal creditors and other stakeholders as it seeks to address near-term liquidity and debt-maturity pressures.
In a regulatory filing on Thursday, the food company said it is working with external financial advisers on a broader restructuring framework that may include debt restructuring, operational initiatives, asset sales, shareholder support, and other capital measures.
DMPL said the performance of its core Philippine business, Del Monte Philippines, Inc. (DMPI), would not be sufficient on its own to address the group’s liabilities and negative equity. It added that no equity raising by itself is expected to restore DMPL to positive equity.
As of July 31, the group had negative equity of $578.5 million, improving from a $589.9-million deficit at the end of April. Its current liabilities exceeded current assets by $609.7 million, mainly due to revolving loans historically extended by local partner banks.
DMPL said it is also exploring the divestment of certain assets to simplify its business structure and generate liquidity. Any transaction would be subject to appropriate approvals, including from minority shareholders where required.
“In light of the existing negative equity, DMPL does not expect to declare and pay dividends to its shareholders while the capital deficit remains outstanding,” the company said.
The group had net debt of $969.7 million as of July 31, down from $977 million at the end of April, mainly due to debt settlements. Current borrowings stood at $577.6 million.
Cash and cash equivalents declined to $4 million from $8.1 million at the end of April, which the company attributed mainly to the timing of payments.
The balance-sheet pressure comes despite an improvement in earnings.
Attributable net profit nearly tripled to $16.1 million in the three months ended July 31 from $5.5 million a year earlier. Revenue rose 9% to $222.1 million, while gross profit increased 13% to $74.7 million.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 25.7% to $49.3 million, while operating profit increased 14.1% to $41 million. Gross margin improved to 33.7% from 32.5%.
DMPL said the improvement in net profit reflected stronger sales, gross-margin expansion, improved operating income, and lower financing costs.
International sales rose 21.4% to $118 million, led by higher volumes of fresh pineapple, packaged products, and not-from-concentrate juice. Fresh pineapple sales increased 20.3%, while packaged pineapple sales rose 23.3%.
Asia-Pacific sales increased 5.8% to $195.1 million, supported by higher export volumes, particularly to China and South Korea, and higher prices for S&W Deluxe Pineapple.
Philippine sales rose 2.2% in peso terms but fell 6.9% in US dollar terms to $82.6 million due to peso depreciation. The company also cited softer volumes in its core segments.
Sales in Europe rose 71% to $19.5 million on higher packaged pineapple sales, while sales in the Americas declined 6% to $7.5 million.
DMPL said it expects the business to remain profitable in fiscal year 2027, although the operating environment remains challenging. It said volatility in fuel, fertilizer, and tinplate costs, as well as uncertainty surrounding El Niño, could affect performance.
At the local bourse on Thursday, DMPL shares fell 5.41% to P3.50 apiece. — Alexandria Grace C. Magno