Fresh Del Monte Produce reports Q3 results

Noting a slight decline in net sales but improved profits in its banana trade, Fresh Del Monte Produce Inc. has reported financial results for the third quarter.

“We delivered solid results for the first nine months of 2023 driven by higher gross margins, strong adjusted EBITDA and adjusted earnings per share growth compared with the same period last year,” Mohammad Abu-Ghazaleh, Fresh Del Monte’s chairman and CEO, said in a news release. “We also continued to return shareholder value by reducing our debt, improving efficiencies and continuing to deliver innovation-led, new-to-market products.”

Fresh Del Monte’s recently published annual sustainability report outlines the progress the company has made on its goals, including shrinkage and waste, Abu-Ghazaleh said.

Net sales for the third quarter of 2023 were pegged at $1 billion, down about 5% compared with $1.05 billion in the prior-year period. The company said the net sales variance was primarily driven by lower sales volume in the fresh and value-added product segment and a decrease in sales in the other products and services segment due to softened global demand in the company’s third-party ocean freight business. Partially offsetting the net sales variance were higher selling prices of non-tropical fruit and fresh-cut fruit and higher volumes and per unit selling price of avocados, the company said.

Gross profit for the third quarter of 2023 was $74.4 million, down 15% compared with $88 million in the prior-year period. Gross profit was impacted by lower sales volume across most products, a stronger Costa Rican colon and Mexican peso, and the inventory write-off and clean-up costs related to the flooding of a seasonal production facility in Greece due to heavy rainstorms, partially offset by lower distribution and ocean freight costs, the company said.

Related: Fresh Del Monte named Humankind 100 company

Adjusted gross profit for the third quarter of 2023 was $82.8 million, down 6% compared with $88 million in the prior-year period, the company said.

Operating income for the third quarter of 2023 was $25.4 million, down 50% compared with $51 million in the prior-year period. The variance in operating income was primarily due to lower gross profit, impairment charges due to low-yield banana farms in the Philippines and the damage related to the floods in Greece, the company said.

Net sales of fresh and value-added products for the third quarter of 2023 were $574 million, down 4% compared with $599.8 million in the prior-year period. The lower sales were primarily a result of lower sales volumes of non-tropical fruit, pineapple, fresh-cut fruit, and fresh-cut vegetables as well as prepared foods, partially offset by higher per unit selling prices of non-tropical fruit, fresh- cut fruit and pineapple product categories combined with higher sales volume and selling price of avocados, the company said.

Gross profit for the third quarter of 2023 was $36.2 million, down 34% compared with $55.1 million in the prior-year period, the company said.

“Gross profit variance was primarily due to higher production and procurement costs of most products, partially due to a stronger Costa Rican colon and Mexican peso along with, lower net sales volume, partially offset by higher selling prices and lower ocean freight costs,” the company said.

Net banana sales for the third quarter of 2023 were $384.7 million, down 1% compared with $388.4 million in the prior-year period. The small change was primarily because of lower selling prices and sales volume in North America mostly offset by higher sales volume and per unit selling prices in Europe, the company said.

Gross banana profit for the third quarter of 2023 was $31.9 million, up 41% compared with $22.6 million in the prior-year period.

“The increase in gross profit was due to lower distribution, ocean freight, and product costs partially offset by a stronger Costa Rican colon,” the company said.

The company said its total long-term debt remained sequentially relatively flat at $401 million at the end of the third quarter but is down 26% from $539.8 million at the end of fiscal year 2022.