Del Monte Pacific sets USD70-M capital budget, eyes expansion in China M

ANILA -- Listed branded food and beverage firm Del Monte Pacific Limited (DMPL) is earmarking USD70 million in capital expenditures (capex) for its fiscal year 2018 starting May, as it expands in the Chinese market to increase footprint in Asia.

DMPL Chief Financial Officer Parag Sachdeva told reporters next fiscal year’s capex will finance new product offerings and expansion projects in Asia and United States (US).

It spent USD50 million this fiscal year ending next month.

“We are looking at million to USD40 million in the Asian side and similar amount on the US mainly to drive supply chain optimization and accelerate our margin to the US, and for new products,” he said.

DMPL Chief Operating Officer Luis Alejandro said the company aims to accelerate its business both in the US and Asia over the next five years to at least maintain its low-teen annual growth.

“Asia Pacific, Middle East and Americas I think we should be very busy,” he said. “We will grow everything. China should be a big part of our business. It should cover at least hopefully one-third we get outside of the US.”

Alejandro said the US market currently comprises 80 percent of its total business, while the international business cornering the remaining 20 percent with China accounting for less than 10 percent.

“Later on, we expect it to be 60 percent (for) US and 40 percent international. That will be a better balance, we will grow the total business probably in five years,” he added.

Alejandro further said it is focusing on its core business of selling fresh pineapple under the S&W trademark in China.

He said that apart from China, the company has also presence in Korea and Japan.

“The other countries we are not yet present and we want to be present is really Indonesia. (This is) because they are saying that Indonesia, in addition to China and even the Philippines, are really going to be the drivers of growth in the next five years,” he said.

DMPL is issuing from March 22 to 28 an initial tranche of up to USD250 million worth of dollardenominated preferred shares, the first product offering under the Philippine Stock Exchange’s (PSE) dollar-denominated securities (DDS) program.

Parag said the company planned to offer the balance of the total USD360 million worth of dollar-denominated preferred shares within three years.

Target shares listing and commencement of trading on the PSE will be on April 7, 2017.

“I think the most important is we will see how the reception on the USD150 million then we will make a decision (on the next tranche),” said Alejandro.

The company aims to use proceeds of the offer to partially refinance the USD350-million loan facility extended by BDO Unibank and to pay fees and transaction costs from offering of preference shares.

Eduardo Francisco, President of BDO Capital and Investment Corporation, said the offering targets institutional investors and some high-network and retail investors. “The deal is already oversubscribed,”said Francisco. The BDO Capital and Investment Corp. is the sole issue manager to the offering.

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