Calavo Growers Inc. said quarterly profit plunged 54% as tight supplies pushed costs up sharply, though the company expects improved results as crops from Chile and Mexico become available.
The company’s weaker profit was “due principally to the limited avocado supply and strong avocado demand,” Calavo’s chief executive, Lee Cole, said in a Sept. 7 statement announcing financial results. “Most significantly, the limited supply of avocados drove up fruit costs overall, and specifically in our prepared avocado business,” he said.
In Calavo’s prepared avocado business, fruit costs were up more than 70% during the quarter, compared with the same period a year earlier, Cole said.
Cole said he’s seeing “promising early indicators” of an easing in the tight avocado supplies, which have been a “stiff headwind to our operating performance the past two quarters.”
“The seasonal supply of avocados sourced from Chile has begun in earnest and the crop is significantly larger than last year’s,” Cole said.
Along with fruit from Mexico, Cole said he expects increased availability of fresh avocados in the market, easing the company’s higher costs.
“We believe the expected improvement in fourth quarter fresh-avocado supply is the beginning of strong volume growth in fiscal 2012,” Cole said.
During the three months ended July 31, Calavo’s fiscal 2011 third quarter, the company posted net income of $2.71 million, down from $5.95 million for the same period a year earlier, the Santa Paula, Cal.-based company said. Sales during the quarter totaled $165.1 million, up 44%.