Del Monte swings to a loss in 2018

February 19 , 2019

U.S.-based multinational Fresh Del Monte Produce Inc. (NYSE:FDP) has reported a net loss of US$21.9 million in the financial year 2018, compared to net income of US$120.8 million in 2017.

The company says the result for the period ended Dec. 28 is largely due to higher fruit and distribution costs across the business and lower banana sales volume.

Gross profit for the year was US$279.8 million, down 16% from 2017, but net sales rose 10% to US$4.49 billion. The company said the increase in net sales was driven by the company’s other fresh and prepared food business segments as a result of last year’s acquisition of Mann Packing Company, partially offset by lower net sales in the banana business.

“We had higher sales in North America, driven by our acquisition of Mann Packing Company in 2018,” said Mohammad Abu-Ghazaleh, chairman and CEO.

“This strategic acquisition accelerated our efforts to diversify our presence in the fresh and fresh-cut vegetable industry. We’re proud of how well the integration has gone during a year in which we faced a number of other challenges, including port delays, severe winter weather events and truck shortages in the U.S., along with higher operating costs.

“As we enter 2019, we continue to focus sharply on implementing our operating strategies, and taking aggressive action to transform our Company to meet consumer demand for healthy and convenient food products.”

The drop in net sales of bananas – down 4% year-on-year to US$1.7 billion – was primarily due to lower sales volume in the Middle East and Europe, along with lower selling prices in Europe, partially offset by higher selling prices in the Middle East and North America. 

Worldwide banana pricing increased by 3% per unit, while the company’s unit costs were 5% higher and its total volume was 7% lower.

In Del Monte’s ‘other fresh produce’ segment, net sales increased by 22% year-on-year to US$2.44 billion thanks largely to increased sales volume in the fresh-cut fruit and vegetable businesses, as well as increased sales volume and selling prices in the vegetables product line thanks to the acquisition of Mann Packing.

Within the segment, net sales of gold pineapple decreased 1% to US$487.9 million, while volume rose 2%, pricing decreased 3% and unit cost was 5% higher. Net sales of avocados increased 5% to US$329.2 million, with volume up 33%, pricing down 21% and unit cost was 23% lower.

Meanwhile, net sales of fresh-cut fruit increased 3% to US$510.6 million, while volume grew 2%, pricing increased 1% and unit cost was 1% higher. Volume of fresh-cut vegetables increased four-fold, with net sales rising to US$433.2 million, while pricing decreased 21% and unit cost was 23% lower.

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