Good morning to all our participants, and thank you for joining Del Monte Pacific's results briefing for the fourth quarter and full year 2025. Representing Del Monte in this call are Cito Alejandro, Group Chief Operating Officer of Del Monte Pacific, and President and COO of Del Monte Philippines. Parag Sajdeva, CFO of Del Monte Pacific and Del Monte Philippines, and I am Iggy Sison, Chief Corporate Officer of Del Monte Pacific. We would now like to share just a few key slides from our results briefing, which we posted last night. After that, we will go to the Q&A session, which our colleague Jennifer Lui will moderate. To start off, Del Monte Pacific made the following announcements on the 9th of April, 5th of May, 2nd of July, and 7th of July. The 9th of April was the settlement of litigation involving DMPL's U.S. subsidiaries.
On the 5th of May was our announcement that DMPL would not contribute certain funding to the U.S. subsidiary. On the 2nd of July, we announced that Del Monte Foods Holdings Ltd. in the U.S. did a voluntary filing for Chapter 11 restructuring in the U.S. On that same day, we also announced the planned deconsolidation of Del Monte Foods Holdings based on IFRS 10. We announced that a majority of the board members of the U.S. subsidiary, Del Monte Foods, had been appointed by a group of lenders. We also said that the new board of DMFHL determined to pursue a sale process along with their voluntary Chapter 11 proceedings. Considering the board changes and the voluntary Chapter 11 filing, the Del Monte Pacific board had decided to classify the U.S. operations as discontinued operations according to IFRS 5, as you will note here. That is as of 30 April 2025, which was the end of our fiscal year.
In the MDNA, the more detailed disclosure that we posted last night, you will see there a balance sheet which is bifurcated, showing one line for assets, non-current assets held for sale for the discontinued business in the U.S., and one line on the liability side, liabilities directly associated with assets held for sale. In view of the losses of Del Monte Foods Holdings' subsidiary and continuing adverse macroeconomic conditions, the DMPL group has recognized a full impairment of related current and long-term assets in Del Monte Foods Holdings amounting to $703.5 million, resulting in a complete write-down of DMPL's investment and other assets in the U.S. subsidiaries. This was in line with the announcements that I went through earlier on the 5th of May and 2nd of July. Effective 1st of May 2025, which is the beginning of our fiscal year 2026, Del Monte Foods Holdings has been deconsolidated from Del Monte Pacific as per IFRS 10. Parag Sajdeva will now go through the fourth quarter and full year 2025 highlights and then go through our strategic priorities and outlook.
Thank you, Iggy. When it comes to our continuing business, excluding U.S., our sales at $191.9 million was a robust growth of 5.4%, driven by the strong momentum that we have in the Philippines. Our gross margin has improved by 470 basis points, driven by a better sales mix, higher sales of fresh pineapple, particularly deluxe, along with good momentum on pricing across all markets. Our EBITDA at $32.7 million also grew in line with our gross profit growth, which was almost 25%. Our net profit at $5.7 million was significantly better than last year, driven by higher sales margins and some minor tax restructuring benefit that we also got in the fourth quarter.
Our net debt for the year is down from $1.1 billion to $1.034 billion, which is again a testimony of strong cash flows that the continuing business has demonstrated, and that is reflected in the cash flow from operations at $108 million, which is a result from the profitability as well as two years of continuing to excel in working capital management, both inventories, receivables, as well as we had ended up stretching our payables to a big extent, particularly in fiscal 2025. Our net debt to EBITDA improved from 10.8x to 7.4 x, resulting from improved profitability and debt reduction. Our net debt to equity is now negative at 1.7x, reflecting the full impact of U.S. write-down, U.S. business investment write-down, and which has led to a capital deficit of $0.6 billion, and accordingly, a debt to equity, which is reflecting 1.7x negative. Next slide, please. Thank you, Iggy.
Now coming to the full year results. In line with what we saw in Q4, our revenue for full year was up 11.1%. Now, to give you some more context, it was driven both by Philippines and international markets. Philippines business grew at 2.8%, and if you take out the impact of FX, our growth for Philippine business was at 5.9%, with volume and mix contributing 4.2%. Our international business grew by 18.7%, and the growth was driven both by fresh. Fresh grew at 21%, and our processed export business grew at 16%. Both of them had a pretty robust growth profile with both volume mix and pricing being positively impacting the revenue trajectory for fiscal year 2025. Our gross margin, very much in line with what we saw in Q4, improved from 24.2% to 28.4%, which is a significant 420 basis points improvement.
As we had communicated, following a tough fiscal 2024, which saw the impact of plantation productivity and yields being significantly lower, as well as impact from some increased waste that we were seeing either from customer claims or inventory-related write-offs, all that is behind us, even though the plantation productivity and yields do have more opportunity to improve in the coming years. Without that itself, we are seeing gross margin improvement of 420 basis points, primarily driven by the revenue mix and lower waste. When it comes to our EBITDA driven by gross profit improvement, we ended at $140.3 million. Our net profit was at $10.9 million, which is obviously a significant improvement versus fiscal 2024. Net debt, we have already covered that in the previous slide, including the leverage profile as well, which is more on an annual basis. Next slide, please.
Here I would like to sum up with the strategic priorities and outlook for the continuing business. As Iggy had outlined, we have deconsolidated the U.S. operations effective May 2025. We would like to reiterate that DMPL has not guaranteed any loans of DMFHL or its subsidiaries, and the group does not believe it has liability with respect to the financial obligations arising out of its voluntary Chapter 11 filing going forward. We also would like to confirm that going forward, we will report the financial performance and outlook on a continuing operation basis, which excludes the U.S. business. As we have enumerated in the past, the group now remains focused on protecting and growing the Asian operations to drive long-term growth and profitability.
Our subsidiary, Del Monte Philippines, has restored profits in 2025, and because of its strong performance, you saw that the continuing operations did see a turnaround with a profit of $10.9 million in fiscal 2025 as compared to a loss that we saw in fiscal 2024. Next slide, please. Our immediate priorities, to just summarize some of them. When it comes to domestic business, it's reinforcing our market leadership in core business, particularly beverage and culinary. We continue to launch new products in new segments to broaden the consumer base. Emerging channels such as convenience stores, away from home, which we traditionally called food service, are going to be also providing good avenues for future growth when it comes to the Philippines.
International, our strategy, as we have seen, has worked, and we would just continue building on it, maintaining market leadership in fresh MD2 pineapples across North Asia, particularly focusing on deluxe pineapple. Our operations focus continues to be on improving our plantation productivity or restoring it to average levels, and we are expecting 15% improvement in fiscal 2025 versus fiscal year 2024. We continue to remain vigilant on waste and profit leaks, and we'll make sure that that also contributes positively to gross profit improvement.
Capital structure, with now the recent write-downs related to the U.S., as I did mention that we have a capital deficit, and hence addressing the capital structure and raising equity is the biggest priority of DMPL's Board and DMPI's Board as well. I would also like to reiterate that just as we saw in fiscal 2025, the group does expect to be profitable in fiscal 2026 from continuing operations driven by the good performance that we saw in fiscal 2025, as well as the momentum that we have seen and has continued in Q1. With that, I would like to now open the floor for questions.
Good morning, everyone. You may type in your questions in the Q&A box, or you may also raise your hand if you want to speak live. We had some questions sent in before hands, so I'm going to start with them first. Our first question is, after the deconsolidation, DMPL is capital deficient. DMPL needs to raise equity soon. Will it be through stock offering, an IPO, or new investors?
As I mentioned, this is a big priority for the Board. We are exploring all options, including private placement and, at some stage, IPO. Raising equity through either of the options that are available or some selective sale of assets will be considered.
Thank you, Parag. As a follow-up to that, assuming without additional capital infusion, basing on conservative yearly profit estimate of $10 million, similar to FY 2025, it will take at least 50 years to offset the current capital deficit. Will there be any chance that DMPL will return private and be delisted in both exchanges?
I won't be in a position to make any speculative statement regarding that, Jennifer.
Thanks, Parag. Our next question is, with just one operating subsidiary, can Del Monte Pacific consider merging with Del Monte Philippines to cut redundant costs, such as board directors, management, office, communication, and overhead?
We would certainly consider all options to improve our profitability so that we can continue improving our operating performance and reducing the deficit that was outlined.
Thanks, Parag. With the asset impairment of $703.5 million, is this final or still subject to Chapter 11 terms and conditions? What is the worst-case scenario? Will DMFI totally be shut down, or will it continue to operate under new management? Assuming it's under new management, how much percent of DMFI will DMPL directly or indirectly own after surrendering the shares by ruling out additional funding?
I think that's a great question. Let me try and answer each one of them. As we have clearly outlined in our presentation, the board has approved the deconsolidation of the U.S. business from May 1st, 2025. In line with that strategic direction, we have made sure that in our fiscal year 2025 results, we impair the investment in the U.S. and bring it down to zero. We also make sufficient provision with regard to any other obligation or assets that may be related to the U.S. business. With that, to the best of our knowledge, we do not have any other material contingent or otherwise any obligation or liability that we are aware of which should impact us on an ongoing basis.
Of course, there will be some litigation costs that DMPL will continue to incur while we are going through the Chapter 11 proceedings because we have legal support, that external legal support that is making sure that the interests of the parent are protected. Other than that, I'm not aware of any other contingent liability that should further impact the parent going forward. In terms of the shareholding that DMPL has, after 25% of the shares of DMFHL were given as part of the settlement that we reached with the lenders, DMPL is now left with 68% of ownership in DMFHL. Let me know if I did not cover anything, Jen.
Yeah, thank you so much, Parag, for that comprehensive answer. Next question is, how much is the group's net borrowings after the U.S. subsidiary filed for Chapter 11?
The net borrowings of DMPL and its subsidiaries, as we outlined at the end of April 2025, are at $1.04 billion. That's a reduction of 7.5% versus last year. This does not take into account our obligations related to perpetual bonds or RCPS.
Thanks, Parag. How much of that sits at the Philippines subsidiary level?
After $1.04 billion, almost $0.6 billion is at the DMPI level, and $24 million is at S&W level.
These questions were sent in before the results were announced. I think this was referring to the DMPI press release now on whether the profit number given for the Philippine operation has included the interest costs associated with the borrowings at the Philippines level.
Thank you for the question. I will try and respond to that. I think there are two parts. The interest expense that we account for at DMPI level is around PHP 1.8 billion, or it's around $32 million. DMPI does charge the parent and its affiliates any interest on overdues. That is to the tune of $8 million- $9 million. The expense that we record in DMPI is net of interest which is charged to the parent and its affiliates. Interest cost that sits outside DMPI is to the tune of $47 million- $48 million. That's how we account for the total interest expense of $78 million- $79 million, which we have incurred in fiscal year 2025.
Thank you, Parag. On DMPI as well, the DMPI operations generated a very strong positive cash flow amounting to $226 million in FY 2025. Can I ask if the management is confident in sustaining this level of cash flow going forward?
That's a great question. I think I did outline that when it comes to our cash flow for continuing business, primarily driven by DMPI, we actually benefited for two years from optimizing our working capital, which obviously helps us from an operating perspective going forward, lowers waste, and many other benefits as well. We also stretched our payables to the tune of $50 million- $60 million. That $50 million- $60 million is obviously not sustainable. On an ongoing basis, what we expect is operating free cash flow, net off capital requirements, of close to $110 million- $130 million that we will see from DMPI. That's the range of cash flow on an ongoing basis that the business will continue generating without taking into account the improvement in profitability that we expect to achieve in the coming years.
Thanks, Parag. Next, we have, what is the net profit of DMPI? Does DMPL still own 87% of DMPI? Is the $10.9 million of the continuing operation that we disclosed, is that net profit equivalent to 87% of DMPI net profit?
Again, great question. Thank you, Jen. If I understand the question correctly, it relates to bridging what we reported in continuing operations and DMPI results. To answer that, yes, DMPL now owns close to 89.5% of DMPI. That is correct. DMPI makes around roughly PHP 4 billion of net income, which is around $70 million. Against that net income, we are now looking at continuing operations of $11 million. The main items of difference are the incremental interest cost, which I already mentioned, is to the tune of $45 million, give or take. We also have withholding tax, which is deducted and is a cost for the group when DMPI upstreams dividend to carry and to DMPL. That cost is roughly around $7 million- $8 million. Those are the two big items which account for the difference between net income of DMPI and what we see in the continuing operations.
Thank you, Parag. What discussions are DMPL having with its existing bankers on refinancing the current $1 billion net debt?
Yes, we have been providing all the events that have taken place. We have kept our bankers completely in the know. Our bankers are proactively working with us. They are definitely aware of the needs, and what we are looking as a next step is to socialize the equity raise plans with them. In line with that, we do completely expect their support to help extend the maturities of our existing debt. That is now being formalized with them and is a big priority for us in the coming months.
Thank you, Parag. What is the expected CapEx for DMPL in FY 2026?
The expected CapEx has two parts: the bearer plans and also our normal CapEx. Normal CapEx that we incur on a traditional basis is to the tune of $25 million- $30 million. That's what we're expecting. On the bearer plans, that is to support the growth of fresh business plus our ongoing cost for growing pineapple, we're expecting it to be around PHP 7.5+ billion , which in dollar terms would be around $130 million- $135 million.
Thank you. Were there dividend shareholder loans paid by DMFHL to DMPL over the past two to three years?
Can you repeat the question?
Were there dividends or shareholder loans paid by DMFHL to DMPL over the past two to three years?
We haven't received any sort of inflows or compensation from DMFHL and its subsidiaries right since inception. Dependency of the parent from DMFHL has not been there at all. To that extent, again, we want to reassure that there would be no change in terms of any, or there's no disruption expected from the deconsolidation of DMFHL and the recent Chapter 11 proceedings.
Thank you, Parag. Next question is, the write-off was around $700 million, and we acquired DMFI at $1.67 billion in 2014. Plus, there's overall losses in the last 10+ years. Does this mean that almost $1 billion of losses were shouldered by the acquisition loan lenders? I think he's trying to account for the difference between the $700 million write-off and the $1.7 billion acquisition cost.
Let me put it this way. The total investment by the parent is to the tune of $1.2 billion. That includes capital investment of $1+ billion , which is now impaired by $0.7 billion. $0.5 billion would be the losses over the years that the parent has incurred and which has diluted equity over the years or investment over the years.
Thanks, Parag. Okay, next we have, how much is the hit for DMPI related to transactions with DMFI? Will this be booked in FY 2025, and is it one-time or staggered?
Yes, we have, as I said, we have accounted for all impairments, and that's covered in the numbers which we have announced. Nothing else is pending that is not covered from the recent events related to DMFHL.
Kindly share details on the other business of Del Monte Pacific outside Del Monte Philippines.
Outside Del Monte Philippines, there are two other investments that we have. One is, as was also recently announced in fiscal 2025, the board recently approved the merger or sale of Del Monte India operations into a company called Agro Tech Foods . We now have a minority position in Agro Tech Foods , and we hold Agro Tech Foods as a listed company in India. We have 14% of interest in that company. We are holding, DMPL holds that investment on its books. The market value of that investment is between $50 million - $60 million. That's one. The second is outside DMPI, we do have a trading business, which is S&W Fine Foods. S&W Fine Foods is a vehicle that we use for selling all S&W branded and private label packaged food businesses through that. The revenue of that business is close to $100+ million .
It comprises of products mainly that are manufactured by DMPI. It also includes a range of traded products that we get from various co-packers across the globe. The entire range of S&W business has a revenue of close to $50 million out of the $100+ million that I mentioned, and the rest is private label. That's the second main business outside of DMPI. Third, we have a small investment of close to $10 million at DMPL into a European or a Spanish business with whom we have been collaborating on the frozen technology, and we have been using that for our pineapple products as well. That would be the three major areas of business or assets that we hold on our books outside DMPI.
Thank you, Parag. Kindly update us on the current status of the SEA Diner stake in DMPI.
SEA Diners now owns 10.5%, and it's in the form of RCPS. The RCPS is considered part of our equity. In addition to that, we also have some holdings in our perpetual bonds as well.
As a follow-up to that, in addition to the $1 billion in debt that we have, could you help clarify DMPL's total financial obligations when factoring in the RCPS and perpetual securities, and how much of this is attributable to DMPI? Given the current capital deficiency, is there any expected delay in interest or dividend payments?
If we include the obligations related to RCPS and perpetual bonds, that's to the tune of $0.2 billion. In addition to the $1.04 billion, if we include that plus our support from affiliate, namely NutriAsia, our total obligations would be $1.3 billion.
Thank you, Parag. We don't have any more questions. That's it for our Q&A.
Okay, thank you so much.
Thank you so much.