Calavo posts Q1 loss despite record revenues

More News Top Stories
Calavo posts Q1 loss despite record revenues

California-based Calavo Growers posted a loss in its first financial quarter despite notching record revenues that were driven by a sharp increase in fresh avocado sales.

The company said that "transitory factors" in its three business segments resulted in profit that fell beneath company expectations in the period ended Jan. 30.

Revenues rose 6% to a new and consecutive first-quarter record of US$273.3m. Gross profit was cut in half to US$15.8m, and the company posted a loss from operations of US$0.4m versus an income of US$16.6m last year.

“Continued growth in avocado consumption drove double-digit sales growth in our Fresh segment, and propelled total revenues to a new first-quarter high," said James E. Gibson, who started as CEO of Calavo on Feb. 1.

"While we are pleased by this top-line growth, Fresh segment gross profit was impacted by a number of industry factors in the first quarter. Specifically, we encountered market conditions in which selling prices remained relatively flat for most of the quarter, but avocado fruit costs rose consistently across the quarter."

He said these challenging circumstances were primarily driven by an over-abundance of lower-quality fruit.

But while these conditions hit the first quarter Fresh segment gross profit, Calavo is "encouraged" by the indicators which show restored fresh avocado gross profit in the initial month of the current quarter.

In line with its earlier forecast of double-digit growth in avocado volume this year, Calavo packed and sold 15% more avocado pounds in the latest quarter and outstripped overall estimated U.S. industry volume growth in the period.

Calavo's outlook

Looking ahead, Gisbon said that the company would be making numerous new appointments to the company's senior management team over the coming weeks, as well as a boar transition.

"I look to Calavo’s future with excitement and enthusiasm. These outstanding team members will bring energy and leadership that will help drive the company forward in coming years," he said.

He went on to say that despite "turbulent industry conditions" that constrained results in the most recent period, Calavo is confident in the fundamentals of each of the business units and about the prospects for the rest of 2020.

“Estimates for this year’s all-source U.S. avocado supply are at least 10 percent above 2019. That is a promising indicator of opportunities for further volume gains in our Fresh segment, especially as sourcing from California and Peru comes fully online during the summer," he said.

"Reiterating what I mention above, we are encouraged by recent performance in our avocado business and are confident that in upcoming quarters we will return to profit levels in line with our historical margins."

Subscribe to our newsletter