Fresh Del Monte Produce reported Feb. 23 its profits for 2015 were cut in half, due in part to an “extraordinary industry oversupply” of bananas in the final months of the year, as well as a sizable write-off related to the company’s 2003 acquisition of its tomato and vegetable business in North America.
In releasing its full-year 2015 financial results, Del Monte reported net income for the year was $62.4 million, compared with a net income of $142.4 million in 2014.
“The change in comparable net income (loss) for the full year and fourth quarter was primarily the result of lower operating income,” Del Monte officials said in the 2015 financial report posted on the company’s website.
Gross profits also were down.
Gross profit for 2015 was $342.3 million, compared with gross profit of $364.8 million in 2014, according to the report. Gross profit for the fourth quarter was $44.6 million, compared with $62.7 million in the fourth quarter of 2014.
The decrease for the full year and fourth quarter was “primarily attributable to a global oversupply of bananas in the fourth quarter of 2015, partially offset by lower ocean freight costs,” according to the report.
Del Monte also reported $66.1 million of charges related to the write-off associated with the company’s 2003 acquisition of its tomato and vegetable business in North America, according to the report.
Though net income for the year was down compared to 2014, Fresh Del Monte’s chief executive pointed to an increase in net sales for the fourth quarter and full year as a positive sign for the company.
“Our strong sales performance in the fourth quarter and throughout 2015 was characterized by the value of our broad product line, extensive supply chain capabilities and investments in expanding our distribution channels and product sourcing,” Mohammad Abu-Ghazaleh, chairman and CEO, said in the report.
Net sales for the year increased to $4.05 billion, compared with $3.92 billion in 2014, according to the report. Net sales for the fourth quarter also increased $48.6 million to $977.9 million, compared with $929.3 million in the prior year’s fourth quarter, according to the report.
The increase in net sales, however, was partially offset by lower selling prices in several of the company’s product lines, “primarily due to exchange rate variances of $115.6 million for the full year and $17.8 million for the fourth quarter of 2015,” according to the report.
Abu-Ghazaleh pointed to sales gains in Del Monte’s fresh-cut and avocado product lines as key factors in driving the company’s overall increase in net sales and putting it in a good position to continue that trend in 2016.
“The year-over-year growth in our top line shows that we are exceptionally well-positioned in the markets,” he said in the report. “Our global fresh-cut and avocado product lines continued to drive growth in the fourth quarter. However, our performance in the quarter was negatively impacted by an extraordinary industry oversupply of bananas in the final months of 2015.”