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Del Monte Pacific share price down on back of Q2 losses

The food and beverage group saw share price plunge 1.1% after it announced a net loss of US$37.4 million in Q2 FY2020.

Source: Bloomberg

Food and beverage producer Del Monte Pacific Limited (SGX:D03) recorded a net loss of US$37.4 million in the second quarter of its 2020 fiscal year, down from a net profit of US$8.4 million in the same period last year.

The group attributed this to one-off expenses amounting to US$76.8 million, due to the closure of four US plants.

On the top line, the company achieved a gross revenue of US$558.7 million for the three months ending October, up 0.4% from Q2 FY2019.

Deducting one-off expenses, however, the group’s EBITDA (earnings before interest, tax, depreciation, and amortisation) was US$69.5 million for the second quarter of its FY2020, up 55% year-on-year.

Share price post-earnings

Following the earnings report on 06 December, share price immediately plunged 1.1% from S$0.136 per share to S$0.1345 per share, according to IG data.

With the weekend to soften sentiment, shares opened at S$0.1405 to open Monday trade, before falling back down to S$0.136 to close Tuesday.

On Tuesday, the group also experienced its highest volume of trade since 25 November, with 301,800 trades.

Analysts from CIMB Research and DBS Research have issued a ‘hold’ position on the company’s stocks.

Across the year, Del Monte Pacific shares have a 52-week price range of S$0.105 to S$0.159, and a current market capitalisation of S$256 million.

Optimistic outlook for the rest of 2020 fiscal year

For the rest of FY2020, the group expects to stay profitable, ‘barring unforeseen circumstances’.

It stated that it will continue to strengthen its product offerings and enter new categories, in line with market trends for health and wellness, snacking and convenience.

Del Monte Pacific will also continue to review its manufacturing and distribution footprint in the US to further improve operational efficiency, reduce costs and increase margins.

“The plant restructuring in the US is a necessary step for us to remain competitive in a rapidly changing marketplace,” said DMPL Managing Director and Chief Executive Officer Joselito D Campos, Jr.

“Ongoing transformational initiatives at DMFI are already showing a positive impact on FY2020 results, and DMFI is on track to exceed recurring EBITDA targets for this financial year. We are maintaining solid market share across legacy categories, while expanding into other new growth categories and channels,” he added.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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