Del Monte Pacific Limited (D03) Earnings Call Transcript & Summary

Good evening to our conference call participants in the U.S., and good morning to our call participants in Asia, including Singapore, the Philippines and other locations. This is the conference call for the fourth quarter and full year results of Del Monte Pacific Group, or DMPL, ending April 2020. Representing Del Monte in this call are Cito Alejandro, Group Chief Operating Officer of DMPL; Parag Sachdeva, Group CFO of DMPL and Del Monte Foods', Chief Operations Officer and CFO; Greg Longstreet, CEO of Del Monte Foods. And this is Iggy Sison, Chief Corporate Officer of DMPL. Before we start the call, may we request everyone to please mute his or her phone. Thank you. So Parag Sachdeva will now present our results.

Thank you, Iggy. On Slide 5, starting with the fourth quarter highlights. Group sales expanded by 48% due to pandemic-driven higher consumption of healthy and culinary home products, with U.S. sales up 65% and Philippines sales up 18%. EBITDA increased by 44% to USD 55.9 million, but one-off plant optimization and retiring loan-related expenses in U.S. contributed to a net loss of $12.4 million. Net profit would have been USD 4.8 million without one-off expense. Our subsidiary, Del Monte Philippines Inc, DMPI, had a net profit for the full year of $67.6 million. We had a private equity investment in a 12% stake in DMPI for USD 120 million, which is resulting in a valuation of USD 1 billion for DMPI, and a net gain of USD 77 million that was booked in retained earnings. Special dividend of USD 0.014 (sic) [ USD 0.0154 ] per share was declared. We have successfully refinanced Del Monte Food loans as a subsequent event. Slide 6. In terms of outlook, we will continue to meet sustained demand for our trusted, healthy shelf-stable products, and continue to optimize our production facilities while implementing strict safety measures. Our strategy is to strengthen the core business, expand the product portfolio in line with market trends for health and wellness and grow our branded business while reducing nonstrategic business segments. Aside from the DMPL base business, DMFI is also well positioned to improve performance in fiscal year '21 with better sales mix and management of costs. We do not anticipate material one-off costs in the coming fiscal year. The DMPL Group is expected to return to profitability in fiscal year '21 barring unforeseen circumstances. However, due to the seasonal nature of the group's business, some quarters may still incur a net loss. On Slide 7, fourth quarter group results summary. Sales of $638.4 million, higher by 47.6% versus the prior year. U.S. sales, as mentioned, are up 65.2%; Philippines higher by 14.5% in local currency and 17.7% in U.S. dollar terms. S&W brand in Asia declined by [ 15.8% ]. [Technical Difficulty]

Can you -- we ask everyone to please mute his phone or her phone?

Let me repeat that. S&W brand in Asia declined by [ 15.8% ] mainly due to lower sales of fresh pineapples in North Asia. JV in India declined by 14% in local currency as the B2B business did get impacted by COVID-19. EBITDA of USD 59.8 million, up 38%, due to surge in volume in the U.S. and Philippines amidst pandemic-driven higher consumption of trusted healthy shelf-stable products. Operating profit of USD 34.2 million, up 21% from USD 28.3 million. Net profit of USD 4.8 million, down 48% from USD 9.2 million. All of the above profitability numbers are without one-off costs and are versus last year. Slide 8, a brief overview of nonrecurring expenses. Net one-off costs in the fourth quarter is USD 15.2 million on a pretax basis, mainly coming from true-up costs related to closure of plants and execution of asset-light strategy amounting to USD 3.9 million and $11.2 million relating to retiring loans in the U.S., almost 1 year ahead of maturity. USD 3.4 million is the deferred tax on undistributed share and profits of our subsidiary DMPI for the quarter. A more detailed overview of our results for the quarter on Slide 9. Fourth quarter sales at USD 638.4 million, 47.6% higher than last year from higher sales in the U.S., Philippines and S&W packaged sales in Asia driven by the pandemic, will be explained more in the turnover analysis. Our gross margin at 17.8%, lower by 110 basis points, led by higher product costs mainly from metal packaging, lower fruit and vegetable yields in the U.S., particularly for tomatoes and peas, higher transportation cost to meet the surge in demand and unfavorable sales mix from higher sales of private label, ahead of the discontinuation of certain product lines and lower fresh pine sales in the fourth quarter. Cost headwinds and unfavorable mix was partly offset by price increase in Philippines mainly. Gross profit at USD 113.4 million, higher than last year by 39% due to surge in sales volume as explained above. Our EBITDA of USD 59.8 million, up 38% from $43.3 million due to surge in volume. On a recorded accorded basis, EBITDA and operating income are also higher by 43.9% and 26.8%, respectively. Our net finance expense includes USD 11.2 million, accelerated costs for retiring loans of DMFI as outlined in the one-off costs and impact from change in lease accounting by almost USD 2 million. DMPL's share in the FieldFresh joint venture in India was a loss of USD 0.9 million and lower than last year due to lower sales for foodservice and key accounts impacted by COVID-19 and higher overheads. Tax expense of USD 3.8 million includes USD 3.4 million deferred tax on undistributed share and profits of our subsidiary, DMPI. Net debt at USD 1.36 billion, lower by USD 95 million due to significant improvement in cash flow from operations. Cash flow from operations improved by almost $182 million versus a year ago. Our gearing ratio at 2.41x, mainly driven by lower loans due to significantly higher cash flow from operations, were offset by the reduction in equity due to net loss incurred during the year as a result of group-wide restructuring initiatives partially offset as the gains generated from the sale shares of DMPI as mentioned above. On Slide 10, we'll give some context on our sales and turnover analysis. Americas constitutes 79% of total group sales, it's higher by 65.2% in the fourth quarter to USD 505.5 million, mainly driven by higher volume due to increase in demand from COVID-19 across categories, higher sales for Contadina brand from distribution gains and higher sales of private label ahead of the discontinuation of certain product lines that will be in place from fiscal year '21. DMFI benefited in the categories and segments with strong leadership positions as consumers initially turned to trusted [ names ]. Our 52-, 13- and 4-week share growth outpaced category growth across all categories. The momentum peaked in mid-March, with volumes similar to what was typically seen during holidays as consumers stocked their pantries. Our new products contributed 5.5% to DMFI's retail and foodservice sales in the fourth quarter. Asia Pacific sales in the fourth quarter increased by 5% to USD 122.3 million from USD 116.5 million, mainly due to increase in all major segments, including Philippines, S&W package as well as exports of packaged pineapple products across the globe, partly offset by lower sales of fresh pineapples in North Asia from lower demand attributed to COVID-19. Sales in the Philippines domestic market were up in both peso and U.S. dollar terms by 14.5% and 17.7%, respectively, mainly due to higher volume both in general and modern trade, favorable sales mix and a series of price increases across all categories in line with inflation, mostly taken in fiscal year '19. Group continued to progress with distribution transition in general trade, and Cito may talk about it more in his update. Europe sales were higher at USD 10.6 million by 5.2% mainly from higher sales of packaged pineapple products. Now moving on to full year results, starting with fiscal year '20 group results summary. Sales of USD 2.1 billion are higher by 8.9%. Pleased to report that U.S. sales are higher by 8.8%. If we take out the impact of Sager Creek, which had sales in fiscal year '19, DMFI sales would have been higher by [ 10.6% ]. Philippines higher by 6.6% in local currency and 10.1% in U.S. dollar terms. S&W brand in Asia grew by 9.2%, mainly due to higher sales of fresh as well as processed despite fresh sales being impacted by COVID-19 in the fourth quarter. JV in India had a marginal growth in the -- of 1% in local currency, with Q4 sales, as explained, impacted by COVID-19. EBITDA of USD 225.7 million, up 45% from USD 156.1 million due to higher volume and price increases taken in fiscal year '19, both in the U.S. and Philippine to offset the cost -- the impact of cost headwind. Operating profit of USD 134.7 million, up 46% from USD 92.5 million. Net profit followed the operating profit and -- at $32.2 million was double that of prior year's USD 15.8 million. All of the above profitability numbers are without one-off costs and are versus last year. Slide 12, full year nonrecurring expenses. Our total one-off costs are USD 93.2 million on a pretax basis. This includes USD 79.8 million in closure sale of production facilities. As previously outlined, on 1st November 2019, DMFI successfully sold and transitioned its Cambria operation and related employees to Seneca Foods, Inc. DMFI had also entered into an agreement to sell its production facility in Sleepy Eye, Minnesota and Mendota, and that has now been completed, and these 2 plants have been closed in the fourth quarter of fiscal year '20. DMFI has also completed the sale of Crystal City, Texas facility at the end of April 2020. The production at these rationalized facilities have been transitioned to other DMFI production facilities in the U.S. as well as to the strategic co-packers. The sale proceeds from the sale of 4 plants are USD 27 million. In Q1, we incurred USD 39.6 million of tax on intercompany dividends of a subsidiary. DMPL Philippine subsidiary, DMPI, declared dividends to its parents, and the dividends were taxed 15%. Additionally, we also booked a deferred tax liability on undistributed share and profits of USD 7.5 million for FY '20 on undistributed share and profits of DMPI. As previously mentioned in the Q4 update, $11.2 million relating to retired loans in the U.S. are also in our full year number. We also booked a gain of USD 1.5 million on buyout of second lien loan. Slide 13 provides a little bit more deep dive into our full year results. Very pleased to report that sales at USD 2.13 billion, 8.9% higher than last year across the U.S., Philippines and S&W in Asia and Middle East. Sales growth of 47.6% in Q4 contributed to full year top line growth. Excluding Sager, sales are up 11%. This will be explained more in the turnover analysis. Gross margin at 21.2% is higher by 100 basis points, led by price increase in Philippines and U.S. markets. These more than offset unfavorable impact from local industry pricing, particularly in first half, higher cost of tinplate in the U.S., unfavorable yields, largely due to weather, both in U.S. and Philippines for raw and finished products and under absorption of overheads due to reduced packs in the U.S. EBITDA of USD 225.7 million and operating profit at USD 134.7 million, higher versus last year by 45% and 46%, respectively, on a recurring basis, mainly due to increased gross profit. Impact from change in lease accounting on EBITDA is USD 29.5 million. And even if we take the same [ amount ] EBITDA of USD 196.2 million is a 26% growth versus fiscal year '19. On a reported basis, EBITDA and operating income are $142.2 million and USD 51.2 million, respectively, and include impact of one-off costs incurred following the closure of 4 production facilities. Our net financing expense is higher from the change in lease accounting by USD 8.5 million. Last year also included a net of -- one-off gain of USD 16.7 million on purchase of second lien loan versus USD 1.5 million in fiscal '20. As also explained in the one-off costs, Q4 also includes $11.2 million related to retiring loans in the U.S., almost 1 year ahead of maturity. DMPL's share in FieldFresh joint venture in India was a loss of USD 2 million and lower than last year due to lower sales to foodservice channel and key accounts impacted by pandemic and increase in cost of commodities, higher overheads and strategic marketing investment to accelerate growth of processed food business that was undertaken in the second and third quarter. Tax expense of USD 29.2 million includes intercompany tax on dividends amounting to USD 39.6 million, deferred tax of USD 7.5 million on undistributed profits of DMPI, as explained, in one-off costs, offset by tax credit of higher losses due to closure of production. Net debt and gearing ratio have been covered in the Q4. On Slide 14, when it comes to the sales outlook. Americas constituted 72% of total group sales, higher by 8.8% to USD 1.4 billion, mainly driven by a surge in consumption and shipment for shelf-stable products caused by pandemic as consumers initially turned to trusted names. DMFI has fast-tracked its innovation pipeline in sync with trends for health, snacking and convenience and launched innovative products in growing refrigerated produced packaged vegetable and frozen categories. New products contributed 5.1% to DMFI's retail and foodservice sales in the last 12 months. Asia Pacific sales grew by 9.3% to USD 555.2 million from $507.3 million, driven by increase in sales of S&W business, both fresh pineapple and packaged fruits as well as retail sales and equipment. The Philippine market sales were higher by 6.6% in peso terms and 10.1% in U.S. dollar terms, respectively, driven by peso appreciation, price increases in line with inflation as well as volume growth. Price increase and lower trade promotion spend contributed 2.6% to net sales growth driven by a series of price increases across all categories, mostly in 2019. Sales increased across modern trade and general trade by double digits as all categories delivered growth. As mentioned, the group continued to progress with distribution transition in general trade with distributed sales to their customers, growing at 7% in volume terms. Europe sales were higher at USD 34.1 million by 6.8%, mainly on higher sales of packaged food and pine juice concentrate. With that, I would hand it over to Greg for a market update on the U.S. business.

Thank you, Parag. If you turn to Slide 16 in the presentation, you will see a recap of our Del Monte Foods U.S.A. business market share. We had a very strong quarter in market share and experienced growth in each one of our business units, our canned vegetable business, canned fruit, fruit cup snacks, canned tomato and also our broth and stock business, all grew share during the fourth quarter. It was a very strong quarter for category growth, particularly in center-store grocery store products as consumers responded to the pandemic. And what that pandemic led U.S. consumers to do was to turn to trusted brands, healthy shelf-stable products and really identify new ways to prepare more meals at home. I'm pleased to report that we not only kept up with category growth, we outpaced category growth in each of our businesses. And benefited disproportionately from this issue with consumers and the trust that consumers have in our brands and our products was certainly displayed. And this is all consistent with our long-term initiative to invest in building our brands, bringing differentiation and innovation to market and expanding our distribution channels. On the next slide, Slide 17, some brief highlights from our U.S. Q4 results. Our sales increased 62% in the quarter over a year ago to just over USD 500 million. Again, pantry loading occurred due to the pandemic. But in this prolonged pandemic, what we saw was consumers buying more and more of our products and using those products. And we saw many repeat sales with consumers. We also attracted new consumers and increased our household penetration during this period. So we're pleased with that progress. And we also saw a continued progress with new products. This is an important initiative for us. And we continue to see the accolades for our new product and innovation work. Recently, our Del Monte Foods R&D organization and team was recognized by Food Processing Magazine as R&D Team of the Year for large company category in the U.S. due to our extensive portfolio of innovation that we've launched over the past 12 and 18 months. Reported and adjusted EBITDA for the quarter was USD 34 million and USD 38.1 million, up 31% and 25% from prior year quarter, respectively. Slide 18 are just a few of the highlights of our communication efforts during the fourth quarter primarily in response to the pandemic and the COVID. A lot of effort done to promote our products as an essential product for consumers to thank essential workers on the frontlines inspire consumers to use more of our products at home through new recipe ideas and new use suggestions. We also benefited from being featured across many channels of media in terms of products to buy, products to use as you might pick more home meal cooking, whether you're in a shelter-in-place environment in the U.S. or whether you're restricted from going out and dining. Our products performed quite well and we're a natural substitution for consumers' needs. So continue to be pleased. And that certainly continued for the [ summer months like ] business. Slide 19 is a continued effort around innovation and using innovation to open up new channels of business for us. We have been pleased with the success of our Del Monte Bubble Fruit product. This is an innovative line of fun fruit snack products that contain bursting boba. It's the first of its kind in the U.S. market, and it's done exceptionally well in outlets like Costco, which is a highly innovative retailer. We're in 6 of their 8 locations around the country. And have performed well and have continued that distribution with commitments from Costco into the next fiscal year. Our foodservice business on Slide 20 has learned to be creative, and nimble and adaptive to this environment, obviously, with away-from-home consumption drastically changing in the U.S., we've been creative. We've used [indiscernible] product to offer as takeout and dine-out solutions for many restaurants when consumers are looking for snacking ideas for their family. That's been successful. We've also built a larger business with our pizza topping business or those pizza delivery companies that are having success in this environment. And we've done a lot of work to support COVID reliefs and have found a great avenue there with many distributors in the foodservice area to help support local food banks and those in need and have been very active in that area. Slide 21 recaps a big year for us in terms of our asset-light strategy. As we've described previously, we were simply overbuilt. We had too much capacity that was unused. Our cost basis was too high and our goal was to reduce our footprint and pursue further production in those facilities that we thought were more contemporary, they were lower cost, higher-yielding more productive sites and really work to fill up those sites and utilize all capacity. I'm pleased to report that we are able to move our capacity utilization for our vegetable business, our largest business, from just under 50% in prior years to over 95%. We're even approaching 100% capacity utilization this pack season. And that's bringing some significant savings to the company that we're benefiting from in fiscal '21, and we'll continue to benefit from in future years. On Slide 22, it's another significant event for us that was completed in the fourth quarter, our refinancing. We marketed and refinanced USD 1.3 billion. We partnered with JPMorgan in that effort on a bond issuance of $500 million. Also included in this refinancing was a $450 million asset-based loan. And as a part of this process, DMPL continued their investment and support in our business with new equity as well as a conversion of our prior second lien into common equity in DMFI. Bond investors overall responded positively on bond issuance, given our accelerated path in terms of top line growth and innovation as well as our lower cost structure. DMFI reduced total loan facilities from USD 1.4 billion to USD 950 million as a part of this process. I will now transition the presentation to Mr. Cito Alejandro.

Thank you, Greg. Over now to Chart 23. It was a year of growth across all categories of Philippine domestic. Market share grew throughout the year but further accelerated in the fourth quarter. Our value proposition of health and wellness, and enjoyable delicious home cooking works very well in this pandemic environment. Chart 24. Philippine domestic volume grew 18% in dollar terms and 15% in peso terms. Growth was primarily driven by the retail segment. E-commerce also grew although not yet as dominant as retail. Foodservice, however, was impacted by the closure of restaurants, hotels and resorts. Our 2 fastest categories are 100% by pineapple juice and our full line of cooking sauces, ingredients and meal mixes. Chart 25, our fourth quarter programs focused on healthy mothers trapped at home with menu planning, given the steep rise in home cooking and equally important, the need for variety in home cooked food. Chart 26. Here is a classic example of how our menu planning addresses unique restaurant dishes that were unavailable during the lockdown period. Chart 27, our beverage category is one of our biggest volume and profit drivers. Here, you will see our popular Del Monte beverages offering health benefits related to strong immune systems. Fit 'n Right meanwhile provided lockdown-relevant healthy tips. Chart 28 shows our marketing efforts to increase consumption of our canned fruit pineapple. We featured how mothers can use it in different cooking occasions. We endeavored to make our offering equally relevant in this COVID environment. Chart 29, and moving now to S&W. This shows the full line of our S&W fresh and packaged food and beverage portfolio. China is our biggest market in Asia, where our business was severely impacted due to COVID. Therefore, as you will see in Chart 30, sales of S&W declined in the fourth quarter. Our higher sales of healthy, shelf-stable packaged products was not enough to offset the huge decline in sales of fresh pineapple due to the China lockdown because of COVID. On the brighter side, there have been some improvement in our fresh pineapple sales over May and June, and we expect this to continue in the remainder of the year. Chart 30 just shows the various sales and marketing efforts that we have done in Singapore. These included brand equity building activities as well as in-store promotion. Moving now to India, our business was significantly impacted by lower sales of branded packaged products mainly from COVID and higher cost of commodity. Foodservice accounts for 50% of India sales. Thus, the impact on the business was greater than other DMPL markets. Chart 33 shows our social media campaigns in India. With consumers forced to stay at home, Del Monte stepped up to provide easy-to-make recipes and menus for different meal occasions. And Chart 34. Here, we extended the campaign to online food and mom communities to increase awareness and [ agency ] of the Del Monte brand. I'll now turn you over to Iggy Sison.

Thank you, Cito. On Chart 35, we completed a private equity investment in Del Monte Philippines for USD 120 million to a private equity investment firm. DMPI was valued at 15.7x FY 2019 earnings, resulting in an implied equity value of $1 billion for DMPI for this $120 million investment. And this is highly commendable given the declining capital markets with the Philippines Stock Exchange Index, down about 25% from the peak index of last year. And as Parag earlier stated, this resulted in a net gain of USD 77 million, which was booked in retained earnings instead of net income in the P&L. The proceeds were used for repayment of DMPL bank loans. And this private equity investment is a testament to DMPI's solid standing and future prospects for growth as a food company. Del Monte is well positioned in this environment given our nutritious long shelf life products, which consumers are using to prepare more meals at home as well as build their immunity. On the sustainability front, on Slide 36. As an essential industry, Del Monte Pacific Group continued producing amidst the pandemic lockdown, whether it's a shelter in place in the U.S. or community quarantine in the Philippines, in order to meet demand, for nutritious shelf-stable food. Our group ensured the health and safety of our employees and workforce, adhering guidelines of global health organizations and government health ministries across locations. Del Monte Foods donated $2 million worth of food to Feeding America in response to the pandemic, while Del Monte Foundation in the Philippines donated food and beverage to over 200 government and private organizations supporting health care workers, other frontliners and marginalized communities in the Philippines during the lockdown. DMPI collected over 19 tons of plastic waste for conversion into school chairs and tables for donation to government schools. On Slide 37, given the successful private equity investment I mentioned earlier, and the net gain of $77 million, the Del Monte Pacific Board approved a special dividend of USD 0.0154 per share to common shareholders. So to recap the outlook. We will continue to optimize our production facilities while implementing stringent safety measures to meet sustained demand for our trusted, healthy, long shelf life products as consumers stay at home, prepare more meals and have more snacking occasions with our products as both Cito and Greg highlighted earlier. Our strategy is to strengthen the core business, expand the product portfolio in line with market trends for health and wellness, and grow our branded business while reducing nonstrategic business segments in the group. Aside from the DMPL base business, Del Monte Foods is also well positioned to improve performance this year in FY 2021, better sales mix and cost management. The Del Monte Pacific Group is, therefore, expected to return to profitability in FY 2021, barring unforeseen circumstances. However, due to the seasonal nature of the group's business, some quarters may incur a net loss. Before we open the floor to questions. We would like to remind the DMFI bondholders on the call that Greg and Parag with the DMFI management will hold its management call on the 24th of July at 8:00 a.m. Pacific time. So with that, we would now like to open the floor to questions.

Jason from Loews Corporation. Just reaching out regarding the DMFI entity. Just wanted to see if there was any incremental color you can provide regarding the volume cadence in the months after your reporting period. I just want to understand what the general trends are.

Yes, yes. Well given the environment that we still are in throughout most parts of the U.S., consumers have continued to rely heavily on e-commerce and grocery stores to feed themselves and their families. So we continue to benefit from a strong surge in our core business as well as our new products. So we have maintained a pretty steady state of demand that approaches double digits in most of our businesses beyond the reporting period. Hope that helps.

Got it. Understood. Is it possible for -- and I'm happy to take this conversation off-line or perhaps for the call on the 24th. But in -- are you able to get more granular in terms of the -- or to disaggregated sales, what proportion is coming from volumes versus pricing, and the like. And again, happy to take this call off-line if there are other -- people have other questions regarding the other entities?

No, we're happy to follow-up with you on that off-line. One of the things that certainly also benefited us during this fourth quarter demand and the continued demand is you've seen across the U.S., retail prices have risen. There's been less need to promote. So we've pulled most of our trade promotions and discounts off our go-to-market strategies. So we have seen enhancements in margin and profitability. So we're selling more product at much higher rates at regular retail, nondiscounted retail pricing. So that's certainly been a benefit for us and a continued benefit into the new fiscal year. But happy to take that more off-line. And [ Alfred ] and I can follow-up with you separately.

This is [ George Tan ]. I actually e-mailed my questions to Jen maybe she can just run through the questions I've listed down. I think some have been answered. But I think the others are still unanswered.

Jen, would you like to read the questions...

The first one was on one-off expenses, whether we are still expecting any one-off expenses in FY 2021?

We -- as I mentioned in my update, we are not expecting any material one-off expenses in fiscal year '21.

But my second question is related to the sale of DMPI. You already sold 12%. Do we envision to sell any additional shares in the forthcoming years?

No, not in fiscal year '21. We may go for an IPO if market conditions permit in fiscal year '22. But it's too premature to sort of confirm the same.

To build on what Parag said, as we advised the market in June 2018, we deferred the IPO, [ George ], 2 years ago, and we advised the market that when market conditions permit, then we will relaunch that IPO at a future date. In the meantime, we completed that private equity investment.

Yes, understood. Actually, the market is not looking good. Except that, well, your stock price here in the Philippines is up by 23%. Congratulations to the management and the Board of Del Monte Pacific and Del Monte Foods and Del Monte Philippines.

Thank you, [ George ].

Now I have a third question related to COVID in China, which hit our fresh pineapple sales. I think in your presentation, you did mention some recovery. I wonder what is the extent of the recovery of fresh pineapple sales in China.

Okay. Let me answer this, [ George ]. This is Cito Alejandro. Okay. We were badly hit -- yes, our business was badly hit starting February, February, March and April. It started to recover in April. But as we look at May and June, we're now at about 2/3 of our regular volume in China. So it's a good -- it's a real good sign. I was -- we were very scared because it went down to as low as 20% in February. So now we're back to 2/3 of our regular normal volume, and we will continue to build on that. So we anticipate that the coming months will be favorable. The summer months are always favorable for pineapples. So the fruits are there, and we continue to receive week-by-week higher orders from China.

That looks promising then, yes. My fourth question is with respect to India. Do you -- when do you foresee it breaking even or making profit?

To answer your question, [ George ], actually, we were making cash profits last year. This year, obviously, as I explained, due to strategic investments in marketing and also our fourth quarter significantly being impacted by COVID, we ended up with the net losses of almost $2 million being our share on the losses. But we do expect the performance to improve, particularly in the second half once things do normalize. And we are also focusing more on retail business. So we expect to see improvement. And also...

Breakeven? Sorry?

The breakeven should be -- from a net income perspective, should be next year.

The next year. Okay.

Yes.

And well my last question is really on the interest rate. Sorry, I quote 16% but I think it's about 11.3% for your 3-year debt?

It's a 5-year...

On the 5-year debt -- 5-year debt is around 11.85% or 11.88% to be more precise.

But isn't that quite high given the prevailing interest rate in the U.S.?

Yes. I would say for comparable credits. And at the timing that we did the deal, we did secure market rates, and we did pretty well. And our offer was oversubscribed by almost $200 million to $300 million.

Yes. I think the rate offer was quite high because the 5-year treasury bonds is only about 0.25%. So if you offer 11.5% or something like that, that's really very attractive for investors. But nonetheless, it's there. So we just hope that at some point in time, our credit standing improves and we'll be able to refinance down the road at a lower rate.

Yes, that's our plan.

Yes. That's the plan. That's the plan.

Are there any other questions?

Sorry, one more question. This is Jason again from Loews. Just curious for the American sub, is the call going to be tomorrow at 11:00 a.m.? Or is it going to be on July 29 at 10:00 a.m.?

Tomorrow.

Tomorrow at 8:00 a.m. Pacific time.

Yes, but it's a little [indiscernible]...

Has JPMorgan sent that out to you? No?

No, they haven't. I can follow-up with them directly tomorrow. But...

Yes. we'll make sure that, yes, tonight, too, with there's another message that's -- [ Alfred ], are you on the phone?

He might be on mute.

But we'll follow-up...

Yes, I am Greg.

Okay. Alfred, we should just make sure that, that call is broadcast, the time of that call and details are broadcast to all investors.

Yes, we issued a press release and we also put notices on our bond portal. But if the person who is asking the question -- you can either go to the intralinks or you can reach out to me directly, and I'll be happy to make sure that you have access to that.

Could you give me your e-mail address? I'll shoot that to you right now. Whatever...

Yes. I'll reach out to you. I'll reach out to you.

Okay. Sounds good.

Okay. Are there any other questions? Okay. If there are no more questions, this concludes our conference call, and thank you for joining us today.

Thank you very much.

Thank you. Thank you very much.

Thank you, everyone.

Thank you.