Fresh and fresh-cut fruit and vegetables producer Fresh Del Monte Produce Inc. (FDP) Tuesday reported a decline in net profit for the third quarter, hurt by lower net sales in the company's other fresh produce, other products and services and prepared food businesses. However, adjusted earnings per share for the quarter increased from last year and topped Street estimates by a wide margin.
For the third quarter, the Coral Gables, Florida-based company's net earnings attributable to shareholders was $28.6 million or $0.45 per share compared to $29.3 million or $0.46 per share in the prior-year quarter.
On an adjusted basis, net earnings rose to $38.6 million or $0.61 per share from $29.1 million or $0.46 per share last year, reflecting the effect of tax benefits, foreign exchange translation gains, and lower interest expense.
On an average, six analysts polled by Thomson Reuters expected Fresh Del to earn $0.37 per share for the quarter. Analysts' estimates typically exclude special items.
Adjusted results exclude asset impairment and other charges totaling $10.0 million or $0.16 per share, which include, among other items, asset impairment charges resulting from the company's decision to discontinue pineapple planting in Brazil during the second quarter and its subsequent decision during the third quarter to not use certain property, plant and equipment as originally intended for other crop production.
Net sales for the period fell to $766.2 million from $832.9 million in the third quarter of fiscal 2008. Analysts expected Fresh Del to generate revenues of $819.00 million during the quarter.
On a segmental basis, net sales from banana business increased to $350.9 million from $332.7 million, reflecting higher worldwide banana selling prices and strong global demand. These gains were partially offset by an 8% increase in unit costs, the result of higher fruit procurement costs, the company said.
Net sales from prepared food segment was $85.5 million, down from $102.4 million last year, due to challenging economic conditions and the negative impact of unfavorable exchange rates.
Net sales from other fresh produce dropped to $311.0 million from $354.5 million, primarily due to lower sales in the company's gold pineapple, melon and tomato product lines. Meanwhile, net sales from other products and services was $18.8 million, down from $43.3 million in the prior year, hurt by lower commodity selling prices in Argentine grain business.
Geographically, net sales from North America slipped to $357.3 million from $397.8 million, European net sales were $210.4 million versus $234.9 million in the previous-year period. Net sales from other regions plunged to $14.1 million from $42.3 million, whereas net sales from Asia rose to $95.7 million from $88.5 million, and net sales from Middle East was $88.7 million versus $69.4 million in the 2008-year period.
During the quarter, Fresh Del had an income tax benefit of $12.8 million compared with a provision of $2.6 million in the 2008-year period, and selling, general and administrative expenses incurred by the company rose slightly to $43.3 million from $41.3 million in the last-year quarter.
Gross profit for the three-month period was down to $69.0 million from $79.0 million in the year-ago quarter. Fresh Del attributed the decrease in gross profit to a direct result of anticipated lower volume and selling prices in its gold pineapple product line and higher fruit procurement costs in the banana business, partially offset by higher gross profit in its fresh-cut product line.
In the preceding quarter, Fresh Del had reported attributable net earnings of $52.2 million or $0.82 per share versus $41.9 million or $0.66 per share in the second quarter of fiscal 2008. Net sales for the second quarter had increased to $978.4 million from $972.2 million in the prior year.
For the nine-month period, the company's net income was $115.7 million or $1.82 per share compared with $134.8 million or $2.12 per share in the same period last year. Adjusted earnings were $2.27 per share, up from $2.40 per share in the previous year. Year-to-date, net sales slumped to $2.62 billion from $2.70 billion a year earlier.
Looking ahead, Fresh Del said it expects weak global market conditions to continue in the near term.
FDP closed Monday's regular trading session at $21.92 per share on the New York Stock Exchange.
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