COVID-19 takes toll on Fresh Del Monte’s first quarter
The COVID-19 pandemic played a role in reduced first-quarter earnings for Coral Gables, Fla.-based Fresh Del Monte Produce.
First quarter net sales were $1.12 billion, down about 3% from $1.15 billion from the same period in 2019, according to a news release. The company’s first quarter ended March 27.
Fresh Del Monte reported lower net sales in all business segments. The company estimated the pandemic dropped first-quarter net sales by about $27 million in its fresh and value-added and banana business segments, compared with normal expectations.
“We were challenged across our global operations during the first quarter of 2020 as we navigated through the headwinds created by the COVID-19 pandemic,”
Mohammad Abu-Ghazaleh, chairman and CEO, said in a news release. “Beginning in January in Asia and ramping up in March, our sales were impacted across all of our markets.”
On the plus side, a strong retail presence, diverse product portfolio and organizational flexibility helped Fresh Del Monte adapt to the crisis, Abu-Ghazaleh said in the release.
“Near-term demand in our foodservice distribution channel, net sales of higher price point products such as pineapples, avocados and fresh-cut fruit and vegetables remain challenging, but we remain committed to serving our customers without interruption,” he said in the release. “In terms of liquidity, we believe our cash on hand, availability under our credit facility and cash flows from operations will be sufficient to manage our operations.”
Profit performance
The company reported gross profit for the first quarter at $68.5 million, down 28% compared with $95.1 million in the first quarter last year. The decrease in gross profit, according to the release, was mainly due to lower gross profit in the company’s fresh and value-added and banana business segments.
Gross profit was also hurt by inventory write-downs of $8 million, primarily from reduced foodservice demand, according to the release. Higher ocean freight and production and procurement costs also hurt profits, according to the company.
The company expects supply chain volatility, lower foodservice demand and an overall drop in demand for its products to affect second-quarter results as well.
“The extent of the impact of the COVID-19 pandemic on the company’s financial performance, including the ability to execute on the company’s strategic initiatives, will depend on future developments, including the duration and spread of the pandemic and related government restrictions, all of which are uncertain and cannot be predicted,” according to the release.
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