CORAL GABLES, Fla.–(BUSINESS WIRE)– Fresh Del Monte Produce Inc. BB #:111187 today reported financial results for the second quarter ended June 30, 2023.
“We are pleased with our performance for the second quarter as net income more than doubled and gross profit and gross margin increased substantially when compared with the prior-year period – all while continuing to reduce our debt,” said Mohammad Abu-Ghazaleh, Fresh Del Monte’s Chairman and Chief Executive Officer. “Our strategic efforts led by asset optimization, strategic partnerships, and product innovation continue to guide our decision-making process, which is beginning to reflect in our financial results.”
Financial highlights for the second quarter 2023:
Net sales for the second quarter of 2023 were $1,180.5 million compared with $1,211.9 million in the prior-year period. The net sales variance was primarily driven by the fresh and value-added products segment, specifically lower per unit pricing of avocados due to market conditions, and lower sales volume of non-tropical fruit. Net sales were partially offset by higher net sales in our banana segment, driven by both per unit pricing and volume.
Gross profit for the second quarter of 2023 was $116.8 million compared with $80.7 million in the prior-year period, an increase of 45%. Gross profit benefited from lower product and distribution costs in the fresh and value-added products segment combined with higher banana profitability.
Operating income for the second quarter of 2023 was $72.1 million compared with $34.3 million in the prior-year period and Adjusted operating income(2) was $67.9 million compared with $33.4 million in the prior-year period. The increase in operating income was due to higher gross profit and the gain on sale of our plastics business and other underutilized assets in South and Central America. Adjusted operating income excludes these asset sale gains, as well as $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 incremental expenses associated with the cybersecurity incident in early 2023. In the prior-year period, Adjusted operating income excludes asset impairment and other charges of $0.7 million and a $1.6 million gain on sale of assets.
Other expense, net for the second quarter of 2023 was $6.4 million compared with $2.6 million in the prior-year period. The increase principally resulted from higher foreign currency related losses, primarily related to unrealized losses on balance sheet remeasurement.
FDP net income(1) for the second quarter of 2023 was $47.7 million compared with $21.2 million in the prior-year period and Adjusted FDP net income(2) was $46.2 million compared with $20.7 million in the prior-year period. Adjusted FDP net income for the second quarter of 2023 excludes the abovementioned asset impairment and other charges, gain on sale of assets, as well as a $2.7 million tax effect related to all adjustments. In the prior-year period, Adjusted FDP net income excludes the abovementioned asset impairment and other charges, gain on sale of assets and tax effect related to all adjustments.
(1) “FDP net income” as referenced throughout this release is defined as Net income attributable to Fresh Del Monte Produce Inc.
(2) Non-GAAP financial measure. Reconciliations and other information required by Regulation G can be found below under “Non-GAAP Measures.”
Second Quarter 2023 Business Segment Performance
Fresh and Value-Added Products
Net sales for the second quarter of 2023 were $677.6 million compared with $732.4 million in the prior-year period, primarily as a result of lower per unit pricing of avocados due to market conditions, combined with lower sales volumes of non-tropical fruit. Partially offsetting the decrease were higher net sales of fresh-cut fruit, pineapples, vegetables, and melons due to higher per unit selling prices and higher avocados sales volume.
Gross profit for the second quarter of 2023 was $62.1 million compared with $49.4 million in the prior-year period, an increase of 26%. The increase in gross profit was positively impacted by higher per unit selling prices for most products in the segment and lower distribution and ocean freight costs. Additionally, higher gross profit of avocados, due to lower per unit product cost, and higher demand of our Honeyglow® and Pinkglow® pineapple varieties, positively impacted gross profit. Partially offsetting the increase were higher production and procurement costs of most products which continue to be impacted by lingering inflationary pressures as well as the foreign exchange impact of a stronger Costa Rican colon. As a result of these factors, gross margin increased to 9.2% compared with 6.7% in the prior-year period.
Banana
Net sales for the second quarter of 2023 were $448.8 million compared with $421.6 million in the prior-year period, primarily as a result of higher per unit selling prices in Europe and North America and higher sales volume in Asia, Europe and North America.
Gross profit for the second quarter of 2023 was $50.5 million compared with $22.2 million in the prior-year period, an increase of 127%. The increase in gross profit was impacted by higher net sales and lower distribution and ocean freight costs partially offset by higher production and procurement costs due to the continuing impact of inflation combined with the foreign exchange impact of a stronger Costa Rican colon. As a result of these factors, gross margin more than doubled to 11.3% compared with 5.3% in the prior-year period.
Other Products and Services
Net sales for the second quarter of 2023 were $54.1 million compared with $57.9 million in the prior-year period as a result of lower net sales of third-party freight services due to softened global demand.
Gross profit for the second quarter of 2023 was $4.2 million compared with $9.1 million in the prior-year period as a result of lower third-party freight services net sales. Gross margin was 7.8% compared with 15.6% 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 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 is the first global marketer of fruits and vegetables to commit to the “Science Based Targets” initiative. In 2023, for the second consecutive year, Fresh Del Monte Produce was ranked as one of “America’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. Fresh Del Monte Produce is traded on the NYSE under the symbol FDP.
