US fresh foods group Calavo Growers today (6 June) reported earnings that reached an “all-time high for any quarter in its history” despite a fall in sales during the three months to the end of April.
Calavo said net income rose 14.4% to a record US$9.7m for the three months to 30 April. Operating income grew by 16.6% to US$15.1m.
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The improved profits came amid a drop in sales. Revenues totaled US$220.3m, down from US$221.6m in the corresponding period in the last financial year.
Sales from Calavo’s fresh division due to lower avocado prices.
The latest figures are in line with forecasts made by chairman and CEO Lee Cole earlier this year.
Cole said today: “Calavo posted an outstanding fiscal 2016 second quarter with many notable financial and operational achievements. Most significantly, paced by performance in the fresh and Calavo Foods business segments, the company shattered all prior single-quarter records for gross margin, net income and earnings per share.
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By GlobalData“Calavo sold approximately 16% more cartons of fresh avocados in the most-recent quarter versus the second quarter last year, indicative of sustained and substantial growth in demand. Our company continues to demonstrate its capabilities and resources to navigate successfully through an industry that is growing rapidly as consumption levels move higher. While lower fresh avocado prices constrained the company’s top line, Calavo’s extensive sourcing, selling and production-management resources enabled us to drive higher gross margin in the second quarter.”
Cole said Calavo’s avocado volume growth is part of the larger context of an industry that continues to expand rapidly with total consumption projected to reach at least 2.5bn pounds this year.
The company’s new packing house in Jalisco, Mexico, will come online during the current quarter enabling the importation of avocados from Jalisco to the US, Cole said. “Authorisation of Jalisco avocado exportation is a highly significant development. It is a harbinger of future volume growth for the industry and, by extension, for Calavo. As our substantial capital investment in Jalisco signifies, the company is committed to building a strong operating base in this dynamic growing region.”
Calavo Growers Q2 results by division
– Fresh: US$126m, compared with sales of $137.9m in the corresponding quarter last year. Calavo said “the year-over-year decline in revenues is indicative of marketplace-pricing conditions for fresh avocados”. Gross margin up from $10.9m to $14.1m.
– Renaissance Food Group: +14.7% to US$79m from US$68.4m in Q2 2015. Gross margin down from $6.2m to $6.4m.
– Calavo Foods business: +3% US$15.4m from US$14.9m in the corresponding period last year. Gross margin from $5.6m in last year’s second quarter to $6.6m.
