Strong Margin Improvement in the Fresh and Value-Added Products Segment Compared with the Prior-Year Period, Highlights Strategic Focus
August 01, 2024 CORAL GABLES, Fla.–(BUSINESS WIRE)–Fresh Del Monte Produce Inc. BB #111187 today reported financial results for the second quarter ended June 28, 2024.
“We are pleased to see our growth strategy and company focus yielding positive results, in the fresh and value-added products segment, where we achieved strong margin improvement during the second quarter of 2024. We see pineapple, fresh-cut fruit, avocados, and value-added products as core strengths—with consumers appreciating the innovation, convenience, and taste,” said Fresh Del Monte Chairman and CEO Mohammad Abu-Ghazaleh.
Financial highlights for the second quarter 2024:
Net sales for the second quarter of 2024 were $1,139.7 million compared with $1,180.5 million in the prior-year period. The decrease in net sales was primarily due to lower banana net sales, driven by lower sales volume and lower per unit selling prices for bananas. The decrease was partially offset by an increase in net sales in the fresh and value-added products segment driven by higher per unit selling prices.
Gross profit for the second quarter of 2024 was $113.2 million compared with $116.8 million in the prior-year period. The decrease in gross profit was primarily due to lower net sales, higher per unit production and procurement costs, which were partly driven by the negative impact of increased weather-related events, mainly high temperatures and low rainfall, in production areas in Central America and the Philippines, as well as the negative impact of fluctuations in exchange rates partially offset by lower ocean freight costs and higher per unit selling prices in the fresh and value-added products segment.
Gross profit in the second quarter of 2024 included $1.2 million of other product-related charges, primarily due to $0.5 million for shipment disruptions in the Red Sea and $0.5 million in additional clean-up costs associated with the flooding of a seasonal production facility in Greece during the third quarter of 2023. There were no product-related charges during the second quarter of 2023. Gross margin for the second quarter of 2024 was 9.9%, in line with the prior-year period. Excluding the net impact from the other product-related charges, Adjusted gross profit(1) for the second quarter of 2024 was $114.4 million compared with $116.8 million in the prior-year period.
Operating income for the second quarter of 2024 was $68.2 million compared with $72.1 million in the prior-year period. The decrease in operating income was primarily due to lower gross profit and a higher gain on the sale of assets in the prior-year period. The decrease was partially offset by asset impairment and other charges in the prior-year period compared with a credit for insurance proceeds in the current year. Adjusted operating income(1) was $64.5 million compared with $67.9 million in the prior-year period. Adjusted operating income for the second quarter of 2024 excludes the $1.2 million of other product-related charges mentioned above, a $3.4 million gain on asset sale of a European warehouse and $2.0 million of insurance recoveries associated with fire damage for a facility in South America during the fourth quarter of 2023. In the prior-year period, Adjusted operating income excluded the gain on sale of $8.8 million primarily related to the sale of the Company’s plastics business and other underutilized assets in South and Central America, $4.6 million of asset impairment and other charges related to impairments of grape vines in South America due to low productivity, idle land in Central America, and expenses incurred in connection with a cybersecurity incident in the first quarter of 2023.
Other (income) expense, net for the second quarter of 2024 was a gain of $2.3 million, compared with a loss of $6.4 million in the prior-year period. The change was primarily due to an unrealized gain recognized on an unconsolidated company within the food and nutrition sector and foreign currency gains during the current quarter as compared with foreign currency losses in the prior-year period.
FDP net income(2) for the second quarter of 2024 was $53.6 million compared with $47.7 million in the prior-year period and Adjusted FDP net income(1) was $50.9 million compared with $46.2 million in the prior-year period. Adjusted FDP net income for the second quarter of 2024 excludes the above-mentioned adjustments and the associated $1.0 million tax effect. In the prior-year period, Adjusted FDP net income excludes the above-mentioned adjustments and the associated $2.7 million tax effect.
Second Quarter 2024 Business Segment Performance
Fresh and Value-Added Products
Net sales for the second quarter of 2024 were $694.1 million compared with $677.6 million in the prior-year period. The increase in net sales was primarily a result of higher per unit selling prices of avocados and higher sales volume and higher per unit selling prices of non-tropical fruit. The increase was partially offset by lower net sales of vegetables and fresh-cut fruit due to lower sales volume.
Gross profit for the second quarter of 2024 was $77.9 million compared with $62.1 million in the prior-year period. The increase in gross profit was primarily driven by higher per unit selling prices partially offset by higher per unit production and procurement costs of avocados, as well as the negative impact of fluctuations in exchange rates primarily a stronger Costa Rican colon and Mexican peso. Gross profit for the second quarter of 2024 included the $1.2 million of other product-related charges mentioned above. Gross margin increased to 11.2% compared with 9.2% in the prior-year period.
Banana
Net sales for the second quarter of 2024 were $394.3 million compared with $448.8 million in the prior-year period. The decrease in net sales was primarily a result of lower sales volume in North America due to competitive market pressures and lower sales volume and lower per unit selling prices in Asia along with the negative impact of fluctuations in exchange rates, primarily due to a weaker Japanese yen.
Gross profit for the second quarter of 2024 was $29.8 million compared with $50.5 million in the prior-year period. The decrease in gross profit was principally driven by lower net sales, higher per unit production and procurement costs, and the negative impact of fluctuations in exchange rates due to a stronger Costa Rican colon. The decrease was partially offset by lower per unit distribution and ocean freight costs. Gross margin decreased to 7.6% compared with 11.3% in the prior-year period.
Other Products and Services
Net sales for the second quarter of 2024 were $51.3 million compared with $54.1 million in the prior-year period. The decrease in net sales was primarily due to the sale of the Company’s plastic products business in the second quarter of 2023.
Gross profit for the second quarter of 2024 was $5.5 million compared with $4.2 million in the prior-year period. The increase in gross profit was primarily due to higher per unit selling prices in the Company’s poultry and meats business. Gross margin increased to 10.7% compared with 7.8% in the prior-year period.
About Fresh Del Monte Produce Inc.
Fresh Del Monte Produce Inc. is one of the world’s leading vertically integrated producers, marketers, and distributors of high-quality fresh and fresh-cut fruit and vegetables, as well as a leading producer and distributor of prepared food in Europe, Africa, and the Middle East. Fresh Del Monte Produce Inc. markets its products worldwide under the DEL MONTE® brand (under license from Del Monte Foods, Inc.), a symbol of product innovation, quality, freshness, and reliability for over 135 years. The company also markets its products under the MANN™ brand and other related trademarks. Fresh Del Monte Produce Inc. is not affiliated with certain other Del Monte companies around the world, including Del Monte Foods, Inc., the U.S. subsidiary of Del Monte Pacific Limited, Del Monte Canada, or Del Monte Asia Pte. Ltd. Fresh Del Monte Produce Inc. is the first global marketer of fruits and vegetables to commit to the “Science Based Targets” initiative. In 2022, 2023, and 2024 Fresh Del Monte Produce was ranked as one of “American’s Most Trusted Companies” by Newsweek based on an independent survey rating companies on three different touchpoints, including customer trust, investor trust, and employee trust. The company was also named a Humankind 100 Company for two consecutive years by Humankind Investments, which recognizes companies that substantially impact areas such as access to food and clean water, healthcare, and digital services. Fresh Del Monte Produce Inc. is traded on the NYSE under the symbol FDP.
Contacts
Investors:
Christine Cannella
Vice President, Investor Relations
305-520-8433
Investors@freshdelmonte.com
Media:
Claudia Pou
Vice President, Global Head of Corporate Communications
Communications@freshdelmonte.com
