Fresh-cut sales help buoy Fresh Del Monte earnings
Fresh Del Monte officials say 2019’s increase in earnings reflects the company’s diversification into fresh-cut and value-added, a move the company began with the purchase of Mann Packing two years ago.
Coral Gables, Fla.-based Del Monte reported its annual earnings Feb. 19.
The company acquired Mann Packing for $361 million in March 2018, increasing Del Monte’s offerings of fresh-cut vegetables and value-added items focusing on convenience. Del Monte reported higher earnings for 2019, despite a November Mann Packing recall that cost the company $11 million.
Fresh Del Monte’s gross profit for the full year 2019 was $300.6 million, up from $279.8 million in 2018, according to a news release. Net income attributable to the company for 2019 was $66.5 million, compared with a net loss of $21.9 million in 2018.
“In 2019, we benefited from our 2018 initiatives to realign certain production units, as well as early returns on our 2019 strategic shift to focus on becoming a value-added and more diversified company,” Mohammad Abu-Ghazaleh, chairman and CEO, said in the release.
He noted strong demand for the company’s value-added fresh-cut offerings and avocados.
The company’s net sales for 2019 were $4.48 billion, slightly lower than $4.49 billion in 2018. The release said the decrease was related to lower net sales in the banana segment, offset by an increase in net sales of fresh and value-added items.
Net sales for the fourth quarter were $1.02 billion, down from $1.04 billion in the fourth quarter of 2018. The decrease, according to the release, was mostly due to Mann Packing’s voluntary recall and unfavorable exchange rates.
The company issued a recall of more than 100 products on Nov. 3 after being alerted by the FDA and Canadian Food Inspection Agency about the potential for listeria contamination. No illnesses were reported in connection with the Mann Packing products. The recall losses, according to the release, included $6 million in sales claims related to expected customer payments, $4.4 million in discarded inventory and $500,000 in other costs.
Business segments
2019 Fresh Del Monte fresh and value-added products net sales for the year were $2.70 billion, up from $2.65 billion for 2018. The release said the increase reflected higher net sales in for fresh-cut produce, avocados, vegetables and prepared foods.
That increase, the company said, was partially offset by lower sales for pineapple, non-tropical fruit, melon and tomato lines. Gold pineapple net sales in 2019 dipped 7% to $454.8 million, volume decreased 12% and pricing increased 6%.
Fresh-cut fruit net sales increased 3% to $524.4 million and volume increased 3%, the company reported.
Fresh-cut vegetable net sales increased 9% to $455.9 million, with volume up 5% and pricing 4% higher.
Avocado net sales jumped 16% to $380.7 million, while volume rose 5% and prices were 10% higher.
Banana net sales for 2019 totaled $1.65 billion, down slightly from $1.70 billion in 2018. The decrease in net sales, according to the release, was mostly due to lower sales volume in North America, Asia and Europe, partially offset by higher net sales in the Middle East.
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