Del Monte "very optimistic" for foodservice market normalizing in spring

Del Monte CEO "very optimistic" for U.S. foodservice market normalizing in spring

The CEO of Fresh Del Monte Produce says the company expects that the U.S. foodservice market will return to normality in the spring months, following more than a year of severe disruption caused by the Covid-19 pandemic.

On an earnings call last week discussing the fourth-quarter and 2020 full-year results, Mohammad Abu-Ghazaleh said the foodservice market is slowly recovering.

"We are now seeing some life and activity in the foodservice, it's coming back, not as much as we hope, but at least we see life coming back," he said.

"So we are very optimistic and really encouraged that hopefully, by April, May that the normality comes back to the market in terms of foodservice, and opening up restaurants and hotels and the whole sector. So we are very confident about going into the future. I have no doubt."

Del Monte sales and net income for 2020 came in lower year-on-year for 2020 due to the effects of the pandemic, which the company said caused a $303.6 million hit to its fresh and value-added and banana business segments.

However, Abu-Ghazaleh said in the financial announcement that the company's emphasis on selling non-strategic, underutilized assets, and strengthening its core businesses led to improved cash flow and reduced debt.

These efforts along with its versatile, vertically-integrated platform helped it mitigate the effects of disruptions, including weather and the pandemic, he said.

He added that the company is proud of the progress it has made in the following areas in the midst of a global pandemic - opening a new Mann Packing facility in California that merges four facilities into one, opening a new distribution and fresh-cut facility in Yokohama, Japan, and opening a new avocado packing facility in December 2019.

In the earnings call, Abu-Ghazaleh emphasized that moving four facilities into one during the Covid-19 period "with so many suppliers and so many new machines and so many technicians" was "like Mission Impossible".

"But thanks to God and thanks to our people. Really, we have made an unbelievable achievement by putting up everything and as we speak today it was completely achieved," he said.

"And now it's fully operational with one unit rather than four different units. So you can see what would be the operational efficiencies and by consolidating all this together will be significant."

In addition, when asked about Del Monte's asset sales program and the prices it was receiving, Abu-Ghazaleh provided an example of a recent sale in Chile that had provided an excellent return on investment.

"We had a piece of land that I bought in the late '80s in Chile, about 22 hectares that cost us about probably at the time when we bought that property was like $300,000, $400,000 I remember. And we sold it last year at the end of last year at a $12 million price tag," he said. Those figures would represent a 30 to 40-fold increase in value.

"So just to give you an idea of what kinds of assets that we had and what kind of valuations we have, I don't need to go with the rest. But that is valuable. And that's a nice piece of land that was sitting idle, we didn't cultivate it with anything. It was just sitting there and unutilized."