CORAL GABLES, FLA. — Fresh Del Monte Produce Inc. overcame higher banana product and procurement costs, foreign currency headwinds and the lingering effects of a weak Chilean season to deliver strong results for the third quarter.
Net income attributable to Fresh Del Monte for the quarter ended Sept. 25 was $28.5 million, equal to 54c per share on the common stock, which was up 44% from $19.9 million, or 36c per share, for the year-ago period. Net sales advanced 5.8% to $936.1 million from prior-year sales of $884.6 million. Higher net sales in all of the company’s business segments and higher selling prices for other fresh produce contributed to the growth, which was partially offset by a $27 million exchange rate variance over the comparable quarter.
|Mohammad Abu-Ghazaleh, chairman and c.e.o. of Fresh Del Monte|
“We credit the strong performance for our strategy and progress we have made in transforming our company into a resilient, diversified company, a company that isn’t just dependent on two or three products, markets or customers,” said Mohammad Abu-Ghazaleh, chairman and chief executive officer, during an Oct. 27 earnings call with financial analysts. “One of the key drivers of our results during the quarter was our global fresh-cut business. We grew volume by 30% and sales by 32% year over year. We have an excellent global fresh-cut footprint, as proven by our expanding product lines and growing worldwide presence. We work closely with our customers to find the optimal mix of fresh-cut products that enable us to achieve higher sales, higher price points, and margin expansion.”
The company’s banana segment posted net sales of $425.2 million, a slight increase over the prior year, driven by higher sales volume in the Middle East and North America regions and higher selling prices in the Middle East. Gross profit for the segment fell 8% to $20.6 million.
For the other fresh produce segment, net sales advanced 13% to $420.3 million, led by higher sales volume in Fresh Del Monte’s fresh-cut and avocado product lines and higher selling prices for fresh-cut products. Gross profit increased 20% to $48.9 million.
“We delivered strong sales growth in our avocado business during the quarter, driven by a 52% increase in volume compared with the prior period,” Mr. Abu-Ghazaleh said. “Over the past few years avocados have become a much bigger part of our product portfolio. We believe there is tremendous potential for growth in our avocado business as demand continues to rise, as we penetrate new channels, and as we continue leveraging our platform of 22 distribution centers in North America.”
Prepared food segment sales rose slightly to $90.6 million, due to higher sales volume of canned pineapple and higher sales volume and higher selling prices of industrial pineapple, which partially was offset by lower sales of Jordanian poultry products, due to lower production. Gross profit increased 29% to $13.8 million.
Year-to-date net income attributable to Fresh Del Monte declined 5% to $135.5 million, or $2.57 per share, from $142.8 million, or $2.54 per share. Net sales increased nearly 3% to $3,078.6 million from $2,998.2 million.“While already the global market leader, we have just begun to tap the strength and market potential for worldwide demand for healthy ready-to-eat fruit and vegetables,” Mr. Abu-Ghazaleh said. “I believe we are well-positioned to expand our products and market presence to increase market share in the coming quarters.”