Fresh Del Monte reduces debt, increases quarterly dividend

Coral Gables, Fla.-based Fresh Del Monte Produce Inc. has revealed quarterly and full-year earnings through December that report the company has reduced its long-term debt and increased its quarterly dividend.

For the fourth quarter ending Dec. 29, the company reported adjusted gross profit for the quarter was $56.2 million, compared with $81.7 million in the prior-year period, according to a news release.

"We are pleased with many aspects of our full year 2023 results including our strong gross margins and cash flow which enabled us to have strong full year adjusted earnings per share growth, reduce our long-term debt by $140 million to end the year with an adjusted leverage ratio of 1.7x and continue to return value to shareholders by increasing our dividend 25% for the second year in a row,” Mohammad Abu-Ghazaleh, Fresh Del Monte’s chairman and CEO, said in the release. “Our ability to control costs and sell underutilized assets for $120 million in 2023 allowed us to achieve the company's highest full-year gross profit and margin since 2016.”

In the fall of 2023, the company conducted a strategic review and assessed its operational priorities of our North America operations, including Mann Packing, Abu-Ghazaleh said.

“Preliminary findings of this review were finalized in the fourth quarter,” he said. “As a result of this strategic review and other factors, we recorded a non-cash impairment of $131.2 million in the quarter, primarily related to our Mann Packing operation. We are exploring strategic alternatives for this business while continuing to focus on improving profitability in all areas of our business, including innovations and strategic partnerships, in addition to controlling our costs this next fiscal year."

Financial highlights for the fourth quarter 2023:

• Net sales for the fourth quarter of 2023 were $1.008 billion, compared with $1.04 billion in the prior-year period. The decrease in net sales was driven by lower net sales of banana and other products and services segments, the release said.
• This was partially offset by higher net sales in the fresh and value-added product segment driven by higher per unit selling prices across most products, principally nontropical fruit, avocados, fresh-cut fruit and vegetables, and pineapples, according to the release.
• Gross profit for the fourth quarter of 2023 was $62.5 million, compared with $81.7 million in the prior-year period. The decrease to gross profit was a result of lower net sales, coupled with higher per unit production costs driven by the negative impact of exchange rate fluctuations principally versus a stronger Costa Rican colón, partially offset by lower per unit distribution and ocean freight costs, the release said.
• Adjusted gross profit for the fourth quarter 2023 was $56.2 million, compared with $81.7 million in the prior-year period.
• Operating loss for the fourth quarter of 2023 was $113.4 million, compared with operating income of $31.2 million in the prior-year period. Operating losses were driven by a $133.8 million non-cash asset impairment charge, primarily pertaining to long-lived assets in North America in the fresh and value-added product segment and goodwill in our prepared foods reporting unit, the release said.

Financial highlights for the full fiscal year 2023:

• For full fiscal year 2023, net sales were $4.32 billion, compared with $4.44 billion in the prior-year period. Net sales were primarily impacted by lower sales volumes in all segments, partially offset by higher per unit selling prices for the banana and fresh and value-added products segments, despite a negative impact of exchange rate for the Japanese yen, Korean won and British pound.
• For full fiscal year 2023, gross profit was $350.7 million, compared with $340.2 million in the prior-year period. The increase to gross profit was primarily driven by higher per unit selling prices in the banana and fresh and value-added products coupled with lower distribution costs, partially offset by higher per unit production costs driven by the negative impact of a stronger Costa Rican colón.
• Adjusted gross profit for full fiscal year 2023 was $354.5 million, compared with $340.2 million in the prior-year period.
• For the full fiscal year 2023, FDP net loss was $11.4 million compared with FDP net income of $98.6 million in the prior-year period.