Del Monte 3Q net income drops on Guatemala banana costs, exchange rates
Florida based Fresh Del Monte Produce saw its third quarter 2010 net income drop 54% to US$ 13.4 million compared to US$ 29.2 million in the same period last year as mother nature and currency exchange rates turned sour.
“Our third quarter earnings results reflect that we are operating in a very challenging environment,” the company’s CEO and Chairman Mohammad Abu-Ghazaleh said in the statement.
Net sales during the third quarter increased 4% to US$ 793.1 million, compared with US $ 766.2 million last year. The sales growth was attributed to an increase in banana sales volume in North America and the Middle East, as well as price increases of its gold pineapple line and prepared food business.
However, costs associated with banana production in Central America consumed potential profits.
“Adverse weather conditions again impacted our banana production areas in Guatemala, resulting in higher production costs. These costs were compounded by unfavorable exchange rates in several producing countries; and a difficult banana market in Europe,” the executive added.
Additionally, loss write-offs of US$ 6.6 million associated with the February earthquake in Chile and shrinking its presence in Brazil also took their toll on company results.