(May 2, 12:48 p.m.) High banana prices and strong global demand helped Fresh Del Monte Produce Inc. increase its first quarter net income 23% to $63.6 million.

The Coral Gables, Fla.-based company reported that net sales were $894.9 million in the period, up from $836 million a year ago. Earnings per share increased from 84 cents in the year-ago period to $1.07.

“I think it’s important to note that we generated our first quarter results in an operating environment with the highest fuel and fertilizer costs in history as well as higher containerboard costs,” chairman and chief executive officer Mohammad Abu-Ghazaleh said during an April 29 conference call.

Executive vice president and chief financial officer John Inserra said fuel costs were 65% higher than in the first quarter of 2007, while fertilizer costs increased 52% and containerboard costs rose 9%.

Inserra said the increased costs affected gross profit, which dipped to $96.9 million compared to $99.1 million a year ago.

However, high banana prices based on tight supplies and high demand helped Fresh Del Monte overcome a disappointing quarter in its melon and fresh-cut operations.

Inserra said worldwide prices for bananas increased to $13.64 a box, up from $11.74 a year ago. Del Monte reported $340.1 million in net sales in the category compared to $287.8 million a year ago.

In its other fresh produce business, Del Monte reported $419 million in net sales, down from $426.9 million last year.

Abu-Ghazaleh said the company’s melon business suffered during the quarter because of unfavorable weather conditions in Central America. And though his company was not involved with Honduran cantaloupe recalled because of salmonella, Abu-Ghazaleh said the incident affected sales in the melon category.

Abu-Ghazaleh also said that labor shortages related to immigration issues affected the company’s fresh-cut operations in Oregon, Chicago and Baltimore. He said the company lost business during the quarter but added that the issue has been resolved.

Meanwhile, Del Monte announced that senior vice president of finance Richard Contreras has been appointed to succeed Inserra, who is retiring. Contreras joined the company as North American controller in 1999. Before joining Del Monte, Contreras spent 10 years with Ernst & Young LLP in auditing and accounting.

Inserra had been with the company for more than two decades. Abu-Ghazaleh said Inserra was instrumental in helping Del Monte survive a turbulent period from 1989 to 1996 when the then struggling company was sold three times.