Del Monte Q2 profit tumbles on acquisition-related expenses

Mainboard-listed Del Monte Pacific announced on Monday a plunge in net profit to US$200,000 for the second quarter from US$8.85 million in the same period a year ago from the impact of US$20.5 million in acquisition-related expenses.

These include interest expenses from a long term loan to acquire Del Monte Foods, Inc and short-term bridge financing, which will be refinanced with equity, the company said.

"We are committed to significantly deleveraging Del Monte's balance sheet by reducing debt in the next quarter through an international perpetual preference share offering followed by a rights issue which is expected to raise US$515 million, Mr Joselito D Campos Jr, chief executive and managing director of Del Monte said.

For the quarter ended October 31, 2014,, the group generated sales of US$548 million, up from US$136.3 million a year ago. It posted loss per share of one US cent compared with earnings per share of 68 US cents a year ago. No dividend was announced for the quarter.

"In our main US market, the initiatives taken post-acquisition, which include reverting back to competitive pricing levels, reintroducing the well-recognized classic Del Monte label and reinstating trade support levels, have led to increased market share across our key categories of packaged vegetable, fruit and tomato," Mr Nils Lommerin, chief executive of Del Monte Foods said.

"Our main drawback was the impact of currency deterioration in Venezuela that contributed to the overall decline of 6 per cent in our sales versus the prior year period," he added.

The group added that its Asian business and export sales globally generated US$128.5 million in sales and net profit of US$10.7 million for the quarter.