Banana glut guts Del Monte profit

October 31, 2017 01:11 PM
 
Fresh Del Monte Produce saw profits tank in the third quarter thanks to low margins on bananas due to oversupply.

Fresh Del Monte Produce saw profits tank in the third quarter thanks to low margins on bananas due to oversupply.

Overall net sales for Del Monte increased slightly to $952.7 million, but banana gross profit plummeted to $5.7 million from $39.6 million from the same quarter last year.

The steep decline in the banana segment contributed to much lower gross profit for Del Monte as a whole, $58.3 million versus $118.8 million in 2016.

Prepared food also had a rough quarter, with profit down to $8.2 million from $17.2 million.

Helping offset those issues, fresh-cut and avocados — part of the “other fresh produce” segment — were bright spots for the Coral Gables, Fla.-based company.

Fresh-cut net sales were up 18% to $158.8 million thanks to a 15% increase in volume and a 3% increase in pricing, and avocado net sales were up 35% to $90.4 million due to an 8% volume increase and a 25% pricing increase.

Avocados and fresh-cut account for slightly more than half the sales in the “other fresh produce” segment. For the other members of that group, gold pineapple and non-tropical, net sales were down, and overall profit for the segment fell to $44.4 million, down from $62 million in 2016.

“While we faced a number of challenges during the third quarter, we remained firmly focused on our diversification strategy as the catalyst to further strengthen our competitive advantage,” Mohammad Abu-Ghazaleh, chairman and CEO, said in a news release. “During the quarter we saw strong sales growth in the other fresh produce business segment, supported by our value-added fresh-cut and avocado product lines. We also increased our penetration within new distribution channels, bringing Del Monte-branded products closer to the end consumer.

“However, the quarter was marked by one of the industry’s worst oversupply of bananas in several years,” Abu-Ghazaleh said. “Looking forward, we are confident we have in place the strategies and capabilities to further enhance our competitive strength to deliver growth and shareholder value over the long-term.”

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