An 11% increase in net sales for the second quarter of 2014 has officials with Fresh Del Monte Produce Inc. expressing optimism about efforts to diversify, even though the company’s fresh-cut business posted declines for the third straight quarter.
Chairman and CEO Mohammad Abu-Ghazaleh and other officials with the Coral Gables, Fla., company discussed the second quarter results July 29 in a conference call.
“Our results reflect the continued progress we have made in diversifying our business across our regions, distribution channels and products,” Ghazaleh said.
“Throughout the quarter, we continued to benefit from the execution of our long-term strategies, focus on controlling costs and maximizing operating efficiencies. Our results were further enhanced by higher sales volumes in all of our business segments.”
However, volume for Fresh Del Monte’s fresh-cut products actually decreased 9% for the quarter, which ended June 27. Net sales for fresh-cut products dropped 8% to $107.3 million, according to the company. Del Monte increased pricing for fresh-cut products by 1%, but that was not enough to offset a 5% increase in unit costs.
Overall, net sales hit 1.13 billion, an 11% increase compared with 2013’s second quarter. Gross profit for the quarter was $121.5 million, compared with $105.9 million in the second quarter in 2013.
Higher selling prices for bananas in Europe and the Middle Ease combined increased demand and lower supply were key to the grow profit increase, officials said in a prepared statement released with the financial report.
Net income for the quarter edged above the previous year, coming in at $64.3 million compared with $62 million in 2013. Net sales by segment came in as follows for the second quarter of 2014:
- Bananas — Net sales 11% ($505 million), compared with $457 million in the second quarter of 2013. Worldwide pricing increased 34 cents, or 2%, to $15.50 per unit, compared with $15.16 per unit in the second quarter of 2013. Volume was up 8%. Gross profit was $49.9 million, compared with $34.7 million in 2013. Unit cost was in line with the prior year period.
- Other Fresh Produce — Net sales increased 8% to $518 million, compared with $478.3 million in 2013. Gross profit for the quarter was $55.7 million, compared with gross profit of $62.0 million in 2013.
- Gold pineapple — Net sales increased 27% to $172 million. Volume increased 31%. Pricing decreased 3%. Unit cost was 1% lower.
- Fresh-cut — Net sales decreased 8% to $107 million. Volume decreased 9%. Pricing increased 1%. Unit cost was 5% higher.
- Melons — Net sales increased 15% to $39 million. Volume increased 26%. Pricing decreased 9%. Unit cost was 7% lower.
- Non-tropical — Net sales of $135 million were in line with the prior year period. Volume decreased 6%. Pricing increased 6%. Unit cost was 6% higher.
- Tomatoes — Net sales increased 34% to $33 million. Volume more than doubled. Pricing decreased 35%. Unit cost was 19% lower.