Tokyo, Japan—Metro Pacific Investments Corp. remains interested in acquiring coconut product manufacturer Axelum Resources Corp. although the business failed to achieve its own performance targets, extending the discussion of its acquisition in the process.
June Cheryl A. Cabal-Revilla, MPIC chief sustainability officer and chief risk officer, said the failure has caused the due diligence process to restart.
“The valuation is in discussion in terms of finalizing it, obviously because they have not met their targets, and they’re going to re-forecast their numbers,” Revilla said.
Axelum Resources, for instance, said the US market should be back to pre pandemic level but has not, she said.
“And so we have to dig deeper into the assumptions and the key performance indicators, and others. Then next week we will have a meeting and see their forecast for 2024 because we did the due diligence early last year and this year also. But they’ve been very far from their numbers,” Revilla said.
The due diligence was supposed to have been completed by October but Revilla said they mutually agreed to extend it to rework the numbers.
“But I think from our own perspective and theirs, we want to be able to close it hopefully by the end of the year, subject again to the extended due diligence and them being able to explain their forecast and the results and outcome of their numbers,” she said.
Axelum reported losses amounting to P427.99 million over nine months this year from profits of P717.27 million last year. Most of the losses relate to the third quarter when it declared a P302.02 million loss from last year’s income of P296.43 million.
Sales over nine months fell 19 percent to P4.27 billion from last year’s P5.31 billion.
Axelum booked a one-time loss on inventory amounting to P309.88 million, which reflects management’s estimate of unfavorable price movement on finished goods inventory. Excluding this one-off item, core net income totaled P7.85 million.
“Our short-term focus is to finish the year on a high note while setting ourselves up to be in the strongest position for a major turnaround in 2024. We are already seeing demand uptick in the United States, combined with other positive market indicators, which should further our momentum heading into the holiday peak season,” Henry J. Raperoga, Axelum president and CEO, said.
In February, MPIC said it will acquire a 34.76 percent stake in Axelum for P5.32 billion.
MPIC’s Metro Pacific Agro Ventures Inc. is the acquisition vehicle.
The acquisition strengthens MPIC’s bid as a serious player in agricultural following its investment in the dairy sector last year.
“The north star of our agriculture business is helping our country achieve food security,” MPIC chairman, president and CEO Manuel V. Pangilinan said. “This investment into Axelum will mean more income opportunities for coconut farmers, as well as a broader landscape for Philippine agriculture.”
Axelum leads in the manufacture and export of high-quality coconut products and a major supplier of coconut water. It is also a major exporter of desiccated coconut, coconut milk, coconut cooking oil, and other coconut products.
