Del Monte Pacific’s shares get a lift as it swings to profit in 2019

Del Monte Pacific's shares on the Singapore Exchange rose by S$0.03 from Thursday’s S$0.12 to S$0.15 on Friday.

Del Monte Pacific Source: Bloomberg

Food and beverage firm Del Monte Pacific’s share price gained on Friday after the firm posted a net income of US$20.3 million for the fiscal year 2019, a turnaround from the US$36.5 million of losses in the previous year. The profit was driven by the results in Asia, the group said, while it continues to transform its business in the United States (US).

Del Monte Pacific shares on the Singapore Exchange (SGX) rose by S$0.03 from Thursday’s S$0.120 to close at S$0.152 on Friday. On Monday, the group’s share price rose by 1.32% or S$0.002 to S$0.154, at around 10.30am Singapore time.

The canned fruit manufacturer, which is dual-listed on the SGX and the Philippine Stock Exchange, posted an 11% decline in sales at US$1.95 billion, attributing the fall to the ‘divest(ment) of the Sager Creek vegetable business in September 2017, lower volume of retail branded products due to promotion reduction and distribution losses’.

The firm had sold its vegetable brand business Sager Creek to McCall Farms, a US vegetable and fruits canning firm back in 2017.

‘We have proactively reduced costs within our control amidst headwinds of rising tin prices. We are pleased to deliver a full-year net income for Del Monte Pacific, driven by our results in Asia, while we invest in transforming our US business,’ the firm’s chief executive Joselito D. Campos, Jr. said.

‘We are encouraged by the accelerated pace of innovation and new product launches especially in the US, taking us into new categories and formats outside the can which is not growing,’ he added.

Fourth quarter net income higher year-on-year at US$6.3 million

Net income for the quarter came in at US$6.3 million, higher than the US$4.0 million in the same period a year ago.

For the fourth quarter, sales were 13% lower year-on-year at US$432.6 million mainly due to the divestiture of its Sager Creek business, slower sales in the US and the Philippines, the group said.

Del Monte Pacific share price: Technical view

Del Monte’s share price has performed weakly over the last year, with the share price down by 30% before its earnings announcement on Thursday, due to the lack of profitability in the earlier quarters.

Over the last five years, the firm has seen its revenue up by 7.9% per year. Comparing the firm’s revenue with the steep annual decline in share price of 26% per year, it reflects the pessimism investors have over the continual losses posted by the firm.

However, with the latest positive results, the group’s share price has improved slightly over the last few days. Year-to-date, Del Monte’s shares have since risen by 18.5%, from S$0.13 on January 2, 2019.

Del Monte Pacific Source: IG data


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