RISK

MANAGEMENT
Del Monte Philippines Inc. (DMPI)

Submitted by:
Abella, Pricia Saira D.
Barbuco, Dian Christalain A.
Ilagan, Bryan Aldrin S.
Sierra, John Louie E.
Toledo, Rusty John T.

Audi 26 – Operations Audit

BSACC 3-1
April 3, 2021
Profile of the Company

Del Monte Philippines, Inc. (DMPI) is a leading

producer, distributor and marketer of premium quality,
healthy food and beverage products. It has been in
operation in the Philippines for over 90 years and is the
market leader in packaged pineapple and mixed fruit,
canned and carton ready-to-drink juices, tomato sauce and
spaghetti sauce categories.

DMPI has the rights to the Del Monte trademark

for the Philippines for processed products. It also sells
products under the well-known group brands of
S&W, Contadina and Today’s. Close to two-thirds of
DMPI’s sales are in the Philippines and the
balance in the international market.

DMPI operates a
fully-integrated pineapple
operation with its 26,000-
hectare pineapple plantation
in Bukidnon, Philippines, and
a factory that is about an hour
away from the plantation. It
also operates a frozen fruit
processing facility in
Bukidnon and a beverage
bottling plant in Cabuyao,
Laguna.
It is 87%-owned by Del Monte Pacific Limited, a company listed on the Singapore Exchange
and the Philippine Stock Exchange.

Vision
We nourish families by providing delicious food and beverages that make eating healthfully
effortless – anytime and anywhere. We build brands with quality products that are perfectly
wholesome and thoughtfully prepared.
Core Values
Championing Together
Healthy Familiess
 Ownership with Integrity
Innovation
Commitment to Society & Environment
Excellence in Everything We Do
Risk Management
Risk Specific Risks
Branded and Non-Branded The Del Monte brand not
Business merely in terms of domestic
consumption but in a global
perspective both the branded
and non-branded business in
the market are influenced by
numerous variables such as
rivalry or competition,
inventory adoption, the
dynamic trends in the market,
as well as production
extension and the threats
posed business partners.
Access to Land Policy amendments that are
contingent impacting the
coverage or execution of the
Risk Management
 DMPI should expand
the product range and
markets thus
improving the core
sector.
 Abrupt diversion to
exclusive packaged
goods with a focus on
creativity, human
wellbeing, comfort,
consistency,
competition, and
market appeal.
 The company should
spread the use of
alternative packaging
formats for drinks and
packaged fruits.
 Divergence of
markets and
customers by
expanded
dissemination of
innovative platforms.
 Reinforcement of
marketing techniques
such as consumer
advertising; and
 Strengthening of
working ties with
trading partners.
 The entity should be
aware and vigilant to
any future laws
 agricultural reform by the
government program, as well
as the disposal of public
lands owned by government-
owned and managed
companies, will have an
effect on current contracts
with landowners.
Foreign Currency and In the normal course of
Inflation business, the Company enters
into transactions denominated
in various foreign currencies.
As a result, the Company is
subject to transactions and
translation exposures
resulting from currency
exchange fluctuations,
especially between the
Philippine Peso and US
Dollar.
The Company’s costs are also
affected by inflation.
Credit Risk The company sells its
products through major
distributors and buyers in
various geographical regions.
affecting the extent or
execution of the
government's agrarian
reform policy may
have an effect on the
Del Monte
Employees'
Cooperative's
contract.
 The company should
use natural hedging to
minimize risk that
helps the management
to avoid the downside.
It also helps the
company to endure
challenging market
conditions. A natural
hedge is a risk-
mitigation approach
that involves investing
in assets whose output
is negatively
correlated due to a
natural or intrinsic
process.
 the organization
should minimize the
effects of cost
increases by closely
managing its total cost
structure and
implementing
productivity-
enhancing and cost-
management
strategies,
 In its industry
consumer changes, the
firm should take
inflation into account.
 The company should
implement credit
management
containing credit
policy and specific
 The Company also has
significant levels of
receivables due from related
parties.
Cash and Interest Rate The company’s cash balances
Management are placed with reputable
global and major Philippine
banks and financial
institutions.
The company manages its
interest income by placing
the cash balances with
varying maturities and
interest rate terms. Thus,
includes investing the
Company’s temporary
excess liquidity in short-term,
low-risk securities from time-
to-time.
International Business The Company's international
sales are also influenced by
changes in global supply,
demand, and product prices.
Prices for pineapple juice
concentrate, in particular, are
heavily influenced by the supply
situation in Thailand and the
demand situation in
international markets. Prices
are quite volatile because this is
an industrial commodity
product.
requirements that will
ensure payments of
the obligations of their
distributors and
buyers. A formation
of credit committee
may be performed.
 Management should
monitor the
outstanding trade
receivables from time
to time especially
those transactions
with related parties to
prevent bad debts.
 To ensure that the
company will be
financed continuously
and to improve its
cash flows, loans and
trade credit offerings
may be applied.
 Leasing arrangements
can be an option for
the financing of the
company.
 The company should
obtain the most
favorable interest rate
that will lessen its
exposure to foreign
currency
 To improve its
concentrate product,
the company is shifting
production to more
packaged ready-to-
drink beverages.
 The company must
conduct a thorough
research regarding the
global supply, demand
and prices on a timely
basis.
 The company shall

Tax The Company may lose
certain tax incentives should
it fail to comply with the
conditions for the tax
incentive.
Operations As a multinational integrated
producer of packaged and fresh
fruit products, the Company's
earnings are inextricably related
to a range of other risk factors,
including general economic and
market conditions, adjustments
in business strategy or growth
plans, foreign business
activities, production
efficiencies, input costs and
availability, logistics and
transportation facilities,
litigious counterparties,
insurgent activities and changes
in government regulations,
including, without limitation of
environmental regulation.
Due to COVID 19, the operation
enter to derivative
contract regarding the
purchase of pineapples
which is the main
ingredient on their
product to mitigate the
risk of price changes in
the market.
 The company should
study what is happening
in Thailand and the
factors that influence
the supply in order for
the business to
formulate strategies
and procedure on how
to effectively response
to the existing risk
 The company should
ensure that they
comply with the
specific conditions
pertaining to tax
incentive.
 Rules and regulations
must also be followed
by the company
 A long-term strategic
strategy and annual
operating plan are
developed and
implemented by the
company, which is
backed up by a business
continuity plan, risk
management, and a
corporate sustainability
program.
 The company should
also pursue work
practices and capital
programs that increase
productivity and
reliability
 The Company has
enhanced security
initiatives and improved
 is affected in many ways (1)
employee present in the
production and company (2)
delivery of the product (3) high
price of raw materials such
pineapple.
Environmental Risks The output of the plantation
is subject to certain risk
factors relating to weather
conditions, catastrophes, crop
yields, contract growers and
service providers’
performance, and leasehold
arrangements.
There is no assurance that
natural catastrophes or
stakeholder relations in
the communities where
it operates in the
Philippines to handle
security threats in its
operating units.
 The company should
rely on the minimum
health standards, they
should implement
skeletal workforce to
prevent employee
layoff.
 (2) The business should
be aware to the needed
requirements on how
they enter specific area
to transport properly
without incurring
delays.
 (3) The company should
expect these
circumstances since the
demand of beverages
are high. The company
should properly canvass
supplier on how they
can obtain raw material
in low price yet high
quality pineapple. Also
since there is an
expectation to the high
cost of ingredients, they
should properly conduct
their budget allocation
in order to finance all
area of the company
 The organization
should establish and
maintain a long-term
strategy as well as an
ongoing operating
schedule, which are
followed up with a
contingency plan and
risk reduction steps.
 To prevent these
 climate change will not
materially disrupt the
Company’s business
operations in the future, or
that the Company is fully
capable to deal with these
situations with respect to all
the damages and economic
losses resulting from these
risks.
In its 2018 fiscal year, the
Company experienced the
end of El Nino and the start
of La Nina weather
phenomenon in certain areas
of its operation. This affected
crop yield.
The drought in southern
Philippines impacted the
pineapple supply in the first
semester of FY2018.
Cyber Security The increasing global
incidence of cyber-attacks on
Company servers and
websites demonstrates the
need to strengthen and
improve security of the
Company’s systems.
Cyber-attacks can disrupt
operations such as exploiting
weaknesses in network
devices and servers,
corrupting information and
stealing confidential data
which can lead to financial
losses.
events, the Company
should have
emergency relief and
corporate continuity
policies in place, as
well as services and
measures to mitigate
the impacts of El
Ninos and La Ninas. 
 Plantings should be
undertaken in
different locations to
reduce tonnage loss
and towing units have
been supplemented to
maintain crop
continuity during wet
weather, in order to
manage the effects
from excessive rains
and floods.
 In addition, the
Company may
collaborates with
insurance agents to
determine liability
tolerance and, if cost-
effective, provide
sufficient insurance
coverage.
 Engaging to a third
party to primarily
audit its security of
the system and
mitigate such
information risks.
 Adopting best
practices to be for its
network security,
Designing and
Implementation of
security control in
every area of the
network.
 Company Assets The Company assets are  Company assets
exposed to various risks should be insured to
relating to the assets of, and mitigate such risks
the possible liabilities from, relating to its
its operations. operation.
 Engaging audit
procedures from its
operation to identify
such risks.
Compliance Changes in legislation and  Establish compliance
government regulations programs that aims to
affecting the business may ensure and monitor
affect the operations, the Company’s
strategies and profitability of compliance to the
the Company. laws and regulations
of the governing body.
 Closely monitoring of
the changes in the
legislation and the
government
regulations from time
to time that might
affect the company
including the
environment aspects.
 Compliance as its
main agenda.

References:
https://www.delmontephil.com
https://www.delmontephil.com/hubfs/corporate-governance/enterprise-risk-management/DMPI-
Risk-Management-as-of-May-2018.pdf