Del Monte Pacific (D03) Q2 2025 earnings summary

Executive summary

• Group sales grew 4% year-over-year to 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$22m in Q2 and US$56m for 1H FY2025, mainly due to higher costs and interest expenses at Del Monte Foods, Inc. (DMFI) in the U.S.

• DMFI sales declined 3% in Q2, with gross margin dropping to 16% from 19.1% year-over-year, and net loss widening to US$27m due to excess inventory and unfavorable costs.

• Margin improvement was achieved sequentially at DMFI, with gross margin rising to 16% in Q2 from 10.5% in Q1.

• Restructuring efforts focus on becoming asset-light, reducing management layers, and lowering operating costs.

Financial highlights

• Q2 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.

• Profit leaks, including incremental trade and waste, totaled over $40 million in the first half.

• Working capital improvements have helped manage liquidity despite higher losses and interest expenses.

Outlook and guidance

• Group expects a net loss for FY2025 but anticipates gradual improvement in FY2026 and FY2027.

• 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 on the call.

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