Del Monte: Easing of Covid-19 restrictions drives sharp Q2 profit growth
Fresh Del Monte Produce has posted a strong second financial quarter that saw a big uptick in gross profit, which the company has attributed to relaxed restrictions on social gatherings in key markets.
In the quarter ended July 2, Del Monte recorded a 40 percent rise in gross profit to $110 million, with the margin up from 7.2 percent to 9.6 percent.
Net sales increased 5 percent to $1,141.6 million, while net income more than doubled from $17.9 million to $47.2 million.
Adjusted EBITDA was $83.6 million, compared with $63.5 million in the prior-year period.
“Our strong performance during the second quarter of 2021 reflects relaxed restrictions on social gatherings in some of our key markets, compared to the prior-year period,” said Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer.
“Our pineapple, fresh-cut fruit and prepared food products led sales and profitability growth, despite inflationary and cost pressures, which are expected to continue.”
The higher net sales were primarily driven by sales in the fresh and value-added products and other products and services business segments.
The overall increase in gross profit was partially offset by higher per-unit fuel, labor, inland freight, packaging, production and procurement costs which were negatively impacted by inflationary market pressures and other unfavorable economic conditions, including lack of sufficient labor availability, in the second quarter of 2021.
For the banana segment, net sales for the quarter decreased 1%, principally due to lower net sales in the Middle East, and to a lesser extent in North America, partially offset by higher net sales in Europe and Asia.
But gross profit increased 20%, primarily driven by North America and Europe. Gross profit in the same period last year included $1.6 million of inventory write-offs caused by the pandemic. The primary drivers of the variance were higher per unit sales prices in North America and Europe and lower per unit ocean freight costs, partially offset by higher fuel, labor, inland freight, packaging, production and procurement costs.