U.S.: Expenses squeeze Limoneira results in Q1 - FreshFruitPortal.com

U.S.: Expenses squeeze Limoneira results in Q1

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U.S.: Expenses squeeze Limoneira results in Q1

Losses deepened for California-based citrus group Limoneira Company (NASDAQ: LMNR) in the first quarter of fiscal 2015 despite favorable market conditions and higher lemon volumes. lemons_47310430 panorama

The company's operating loss dropped 13.6% to US$2.5 million due to additional agribusiness costs, which Limoneira said were mainly associated with higher packing costs relating to increased lemon sales and the Yuma, Arizona packing operations that were acquired in June.

"In addition, third-party grower costs were higher in the first quarter of fiscal year 2015 compared to the same period of fiscal year 2014 related to a larger volume of fruit procured from third party growers at higher prices," the company said in a release.

CEO Harold Edwards attributed the result to the seasonality of the business, but highlighted top line growth of 8% that led to a solid start to 2015.

"We continue to make progress on our long-term growth strategy. We recently announced that we expanded our agricultural lease agreement with Cadiz, which increased Limoneira's total lemon tree acreage in California," Edwards said.

"This is in-line with our key initiative to add productive agricultural properties and complements a number of key investments we have made over the past year, including our ongoing expansion project of our Santa Paula packing house, which we expect to become operational later this year, and investments in Arizona and Chile."

Lemons made up almost 90% the period's sales and showed sales growth of 18%, but orange revenue was down by a fifth due to lower prices. Additionally, the alternate bearing nature of avocados meant there were no significant sales of that fruit for Limoneira during the period.

"Net loss applicable to common stock, after preferred dividends, for the first quarter of fiscal year 2015 was $1.6 million, compared to $1.3 million in the first quarter of fiscal year 2014," the company said.

2015 outlook

A lower estimate for the size of the 2015 lemon harvest has led Limoneira to downgrade its sales expectations too, from a previous guidance of 3.2-3.4 million cartons to three million cartons.

"Offsetting the expected reduction in sales volume, we anticipate the average price per carton to increase to approximately $24.00 per carton compared to previous guidance of an average price of $22.00 per carton," Limoneira said.

"In addition, the Company expects to sell approximately 6.5 to 7.5 million pounds of avocados at approximately $1.00 per pound. However, certain of the Company's avocado orchards experienced freezing temperatures during the first quarter of fiscal year 2015 which caused damage to a portion of the fiscal year 2015 crop.

"The extent of the damage is being assessed and is not expected to be known until the second quarter of fiscal year 2015. The volume range of production noted above reflects the Company's current estimate of production net of the effects of the damage."

Even though results have been down recently, the board believes results for the full year will be similar to those recorded in 2015, due to stable lemon and avocado revenue but depending on the extent of avocado freeze damage and lower orange sales; while expenses were up for the first quarter in some areas, selling, general and administrative expenses are forecast to be down for the full year.

"In addition, subject to the extent of the avocado freeze damage noted above, the Company expects to earn approximately $9.4 million to $10.2 million in operating income in fiscal year 2015, compared to $9.9 million of operating income in fiscal year 2015."

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