Del Monte posts flat Q3 and announces $100M asset sale
Fresh Del Monte Produce has posted a relatively flat third financial quarter, which saw an improvement in the fresh and value-added products business segment as well as the sale of $100m of assets.
The company's net income in the quarter ended Sept. 25 fell slightly to $17.4m from $18.1m last year.
Gross profit was $67.3m, down from $76.2m, which Del Monte attributed principally due to lower gross profit in the banana and other products and services business segments.
Gross profit was also impacted by incremental costs, mainly related to other product-related charges of $2.3m. These charges primarily consist of inventory write-offs due to volatile supply and demand conditions caused by the Covid-19 pandemic as well as incremental costs incurred for cleaning and social distancing protocols, also associated with the pandemic.
Meanwhile, net sales were $989.7m against $1070.2m in the same period last year. The company said that the pandemic impacted net sales during the third quarter by an estimated $73.0m.
The estimated impact in net sales is primarily attributable to volatile supply and demand conditions resulting from the pandemic, as well as reduced demand in the Company's foodservice business and shifting demand at retail, as a result of continued mandatory restrictions and social distancing initiatives associated with the pandemic.
Mohammad Abu-Ghazaleh, Chairman and CEO of Del Monte, said he was especially pleased to see an improvement in the fresh and value-added products business segment, which was achieved through "rapid adjustments to all aspects of our business".
"Swift implementation of working capital measures led to improved cash flow and our ability to reduce our debt. As a result we will double our dividends in the fourth quarter of 2020," he said.
"We also continued to take every precaution to ensure the health and safety of our team members and their families allowing us to maintain the necessary workforce to continue to provide uninterrupted healthy, safe, and convenient products to our customers."
Abu-Ghazaleh also announced the sale of "non-strategic and under-utilized assets" for a total anticipated cash amount of approximately $100m, which the company expects to achieve over the next 12 to 18 months.
"These assets consist primarily of underutilized facilities and land across multiple regions," he said.
"In the meantime, we remain aggressively focused on optimizing our current cost structure, improving our profitability, and prioritizing our capital investments."