Fresh Del Monte Produce Co.’s third-quarter earnings fell 2.4% on write-downs while higher banana sales were more than offset by declines in some of the company’s other segments. Still, earnings handily beat expectations.
Chairman and Chief Executive Mohammad Abu-Ghazaleh said the company was “pleased with the strength” of the earnings for the seasonally weak quarter and that it excepts global markets to remain weak in the near term.
Fresh Del Monte and its rivals stand to benefit from a shift in consumer spending toward thrift and bargains, as bananas – one of its main products – remain among the least expensive per-pound products in the supermarket. Still, the industry’s earnings can be volatile given exposure to crude and fertilizer prices, a myriad of import-export laws and quotas, and vagaries of weather.
Fresh Del Monte reported a profit of $28.6 million, or 45 cents a share, down from $29.3 million, or 46 cents, a year earlier. The latest period included 16 cents in asset write-downs and other charges. Revenue decreased 8% to $766.2 million.
Analysts polled by Thomson Reuters most recently forecast earnings of 37 cents on revenue of $819 million.
Gross margin fell to 9% from 9.5% amid lower volume and selling prices for its pineapple products and higher banana costs.
Banana sales rose 5.5% while volume was flat. Other fresh produce sales were down 12% amid weakness in pineapple, melon and tomato sales, as volume fell 13% amid lower pineapple supply and Del Monte’s plans to reduce domestic melon volume. At its prepared-food business sales dropped 16%.
Fresh Del Monte is sometimes confused with Del Monte Foods Co. (DLM), which is in the canned-vegetable business. Fresh Del Monte, which bought Del Monte Foods Europe in 2004, has a perpetual royalty-free license to use the Del Monte trademark for certain products worldwide.
Source: Del Monte Produce Co.