Fresh Del Monte widens loss on fruit, freight costs

by Monica Watrous
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CORAL GABLES, FLA. — Increased ocean freight and fruit costs weighed heavily on Fresh Del Monte Produce Inc., which posted a net loss of $146 million during the fourth quarter.

“During the fourth quarter, we took decisive action to address these challenges and address the shifting global economy and marketplace to drive better performance for the long term,” said Mohammad Abu-Ghazaleh, chairman and chief executive officer, during a Feb. 18 earnings call with analysts. “We made the decision to stop production of bananas in Brazil in 2014 and adjusted our business model in Europe to better manage logistics as we encounter a decrease in consumption of fresh fruit and vegetables in certain markets due to economic factors.”

For the year ended Dec. 27, 2013, the company reported a net loss of $36.8 million, which compared with net income of $145 million in fiscal 2012. Net loss for the quarter was $146 million, compared with a loss of $1.2 million during the same prior-year period.

But strategic moves during the year strengthened sales for Fresh Del Monte. The company expanded global distribution with a new fresh-cut center in Toronto, and a ripening center in France. The company also acquired agricultural land and packing houses in Florida and Virginia for field-grown tomatoes and increased its footprint for bananas and pineapples through acquisitions in Costa Rica and Nicaragua, as well as expanded banana production in Asia.

In addition, Fresh Del Monte extended its reach into new channels, with fresh market stores and refrigerated vending machines, and into new markets, including Turkey, Russia and the Ukraine.

Strong net sales performance across all business segments, with solid volume gains over the previous year, lifted net sales for the year to $3,683.7 million from $3,421.2 million the year before. Fourth-quarter sales increased to $879.9 million from $776.9 million during the same period of the previous year.

Looking ahead, the company is focused on improving its European business and concentrating on higher growth markets in the Middle East and Africa.

“Our ability to weather challenging quarters as we have done in the past is a testament to the strength and resiliency we have built into our business,” Mr. Abu-Ghazaleh said. “Today, I am confident that decisions we made in 2013 will be the driving force of our future performance.”
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