Higher fruit costs have hit quarterly profits at Calavo Growers, the US fresh produce group.
The company said yesterday (7 September) that its net income was US$2.7m in the three months to the end of July, compared to $5.9m a year earlier. Operating income also more than halved, falling from $9.8m a year earlier to $4.5m.
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“The limited supply of avocados drove up fruit costs overall, and specifically, in our prepared avocado business, where fruit prices have risen by more than 70% from last year’s third quarter,” chairman, president and CEO Lee Cole said. “This factor accounts for the majority of the decrease in our third-quarter operating results year over year. Secondarily, the cyclically lower volume of fresh avocados from California resulted in moving fewer overall units, which reduced production efficiencies and increased our per-unit packing costs.
However, Cole added: “We expect this to change with next year’s anticipated larger crop.”
The higher costs offset what Calavo said were “record” quarterly revenues. Third-quarter net sales increased 44% to $165.1m due to “sharply higher” avocado sales and the first contribution from US fresh food company Renaissance Food Group, which it acquired in May.
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