Del Monte Pacific Ltd., which is listed in the Philippines and Singapore, said its exposure in US unit Del Monte Foods Holdings Ltd. amounted to $748 million (P42 billion), based on a stock exchange filing on Wednesday.
This includes a net investment value of $579 million and net receivables of $169 million.
The final value of the write-off will be determined after the audit, the company added.
In 2014, Del Monte Pacific Ltd. paid $1.68 billion to acquire the century-old US food and condiments giant Del Monte Foods, which eventually became part of Del Monte Foods Holdings Ltd.
The US firm was once a candidate for an initial public offering (IPO) but the offer was shelved early last year due to volatile market conditions and its struggling financials.
Big picture
Del Monte Pacific Ltd. is led by tycoon Joselito Campos, who belongs to one of the country’s richest clans.
Campos has long struggled to turn the business around, but it also operated in a tough space.
Aside from its debts, competition from major rivals and private labels— in-house store brands that retailers sell at lower prices—the company also faced inflationary pressures and weaker demand, as consumers searched for more affordable alternatives.
Analyst’s view
“Del Monte Foods (US) has been losing money since before Del Monte Pacific Ltd. (DELM) acquired it in 2014, and DELM has largely failed to turn it around since,” Alfred Benjamin R. Garcia, research head at AP Securities Inc., said in a text message.
“The brand has lost its appeal to the American market and also is unable to maintain its price competitiveness against competitors,” he added.
Del Monte Pacific Ltd. shares in the Philippines last traded at P3.17 each, valuing the firm at about P6.2 billion.
It was first listed on the Singapore Exchange in 1999 and debuted on the Philippine Stock Exchange in 2013 via introductory listing rules, which allow shares to be traded on the local bourse without a public offering.
Focus on the Philippines
Last May, Del Monte Pacific Ltd. refused to provide funds to settle a lawsuit involving its US unit’s debt. This allowed lenders to take control of Del Monte Foods Holdings Ltd.’s board and 25 percent of the firm’s stake in the US business.
“The [Del Monte Pacific Ltd.] board believes that its decision protects the company’s interests and, importantly, will not disrupt the favorable business operations of its subsidiary DMPI,” the company had said, referring to Del Monte Philippines Inc.
US losses
Del Monte Pacific Ltd. said the US business dragged down financials during the third quarter of its fiscal year ending January 31, 2025, leading to group-wide losses of $36 million.
Specifically, US unit Del Monte Foods reported a loss of $40.5 million due to “higher operational costs, unfavorable fixed cost absorption, and increased interest expenses.”
In contrast, Del Monte Philippines saw its profit surge 83 percent to $21 million during the same period.
Del Monte Pacific Ltd.'s net debt fell 6.9 percent to $2.27 billion, but its debt level remained high relative to earnings, with net debt now 17.6 times its earnings before interest, taxes, depreciation, and amortization. This raises concerns about the company’s ability to finance its obligations.
Based on its 2024 full-year report, about half of the debt load came from its US business.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
