Del Monte Pacific (D03) Q2 2025 earnings summary

Executive summary

• Group sales increased 4% year-over-year to US$1.23bn for the first half and US$694m in Q2 FY2025, led by Del Monte Philippines, Inc. (DMPI) with 20% sales growth and 98% net profit increase, driven by strong international pineapple exports and domestic campaigns.

• Despite DMPI's performance, the Group posted a net loss of US$56m for 1H FY2025 and US$22m in Q2, mainly due to higher costs and interest expenses at Del Monte Foods, Inc. (DMFI) in the U.S.

• DMFI sales declined 3% in Q2 to US$480m, with gross margin dropping to 16.3% from 19.1% year-over-year, and net loss widening to US$27m due to excess inventory and unfavorable costs.

• Inventory reduction is on track, with DMFI reducing inventory by US$250m in Q2, contributing to a US$269m group reduction.

• Restructuring efforts focus on becoming asset-light, reducing management layers, and lowering operating costs, with asset sales and capital raising underway.

Financial highlights

• 2Q FY2025 turnover: US$694m (+4% year-over-year); gross profit: US$137.5m (+1.5%); gross margin: 19.8% (down 0.5ppt); EBITDA: US$61.1m (down 4.4%); net loss: US$22.2m (vs. US$8.5m loss prior year).

• 1H FY2025 turnover: US$1.23bn (+4% year-over-year); gross profit: US$225.1m (down 7.7%); gross margin: 18.3% (down 2.3ppts); EBITDA: US$93m (down 19.1%); net loss: US$56.3m (vs. US$21.6m loss prior year).

• Net debt reduced to US$2.42bn from US$2.48bn year-over-year due to better inventory management.

• Finance expenses rose sharply to US$124.5m from US$93.3m year-over-year, reflecting higher debt levels and interest rates.

• Working capital improved to US$142.4m as of 31 October 2024, up from US$39.6m at 30 April 2024.

Outlook and guidance

• Group expects a net loss for FY2025 but anticipates gradual improvement in FY2026 and FY2027 as inventory reduction and restructuring take effect.

• Priorities include selective U.S. asset sales, capital raising, debt reduction, and restoring gross margins, especially at DMFI.

• DMFI to focus on inventory reduction, asset consolidation, and cost streamlining, with benefits expected in FY2026.

• No specific EBITDA or leverage ratio guidance for 2026 was provided.

• Margin dilution is expected in Q3 due to increased trade and holiday promotions.