Lower avocado pricing expected to drive sales, says Mission Produce CEO

Mission Produce Inc., an Oxnard, Calif.-based company that sources, produces and distributes fresh hass avocados with additional offerings in mangoes and blueberries, achieved avocado volume growth of 14% in the first quarter ended Jan. 31, according to a release.

“Our unmatched global network of distribution, ripening, and other value-added assets put us in position to achieve volume growth of 14% during the first quarter compared to the same period last year, which outpaced that of the industry as a whole, and we are ready to manage the increase in volumes that we anticipate this year,” said Steve Barnard, Mission Produce founder and CEO in the release. “While the market is still adjusting to the lower pricing environment and an uncertain macroeconomic backdrop, we are optimistic that lower fruit pricing will ultimately drive greater consumption in the coming year compared to the depressed consumption rates we saw last year.”

Barnard said the shift to “a more rational pricing environment” also allows the company to penetrate emerging markets such as Europe and Asia.

Mission Produce’s other fiscal first quarter 2023 highlights include: 

• Avocado volume sold increased 14% to 152.3 million pounds compared to the same period last year.
• Total revenue of $213.5 million, a 1% decrease compared to the same period last year.
• Net loss of $8.8 million, or 12 cents per diluted share, compared with $13.4 million, or 19 cents per diluted share, for the same period last year.
• Adjusted net loss of $5 million, or 7 cents per diluted share, compared with $12.2 million, or 17 cents per diluted share, for the same period last year.
• Adjusted EBITDA of $2.3 million compared with $10.4 million for the same period last year.

“With respect to our blueberries business, although performance this quarter was impacted by an unfavorable pricing environment, we continue to be optimistic about the long-term performance of this segment given our access to new premium varietals which are expected to sell at a premium and provide an opportunity to extend the marketing window,” Barnard continued.

Total revenue for the first quarter of fiscal 2023 decreased $3.1 million or 1% compared to the same period last year, the company said. Lower sales in the marketing and distribution segment were largely offset by the consolidation of revenue from the blueberries segment. In marketing and distribution, a 27% decrease in average per-unit avocado sales prices was partially offset by an increase in avocado volume sold of 14%, both of which were driven by higher industry supply out of Mexico during the quarter, the release said.

“Looking ahead, our focus remains on the advancement of our global position through investment in new global facilities, and diversification of our business by leveraging our core competencies in new and creative ways,” said Barnard. “We expect that the improved stability in the avocado marketplace, coupled with easing cost inflation, will also allow us to generate sequential improvements in our per-unit margins, albeit below what has been our historical targeted range. With this backdrop, we expect to deliver a better year of operating performance in fiscal 2023.”

Net sales in the marketing and distribution segment decreased 14% to $181.8 million for the quarter due to the avocado pricing and volume dynamics, the release said.

Larger Mexican blueberry harvest ahead

Net sales in the blueberries segment in the first quarter of fiscal year 2023 were $29.8 million. Negative segment adjusted EBITDA was a result of weak blueberry sales prices within the European and U.S. markets driven by strong industry supply, the release said.

For the second quarter of fiscal year 2023, the company expects volumes to be higher versus the prior year period, primarily due to continued expectations for a larger Mexican harvest.

The overall Mexican crop is expected to be approximately 20% higher compared with the prior harvest season, with year-over-year volume increases from Mexico ticking up during the quarter. The quarterly uptick is expected to be partially offset by lower California volumes due to a later start to the harvest season, the release said.

Pricing is expected to be higher on a sequential basis, but lower on a year-over-year basis by 30% to 35% compared with the $2.04 per pound average experienced in the second quarter of fiscal year 2022.

A webcast replay of the conference call to discuss Mission’s first quarter results is accessible in the news and events section on the company's investor relations website.