Calavo Growers, the US fresh foods group, has forecast record revenue and earnings per share in its new financial year after a 12 months that included its highest-ever sales.
Chairman and CEO Lee Cole predicted the company would benefit from rising demand for avocados, while he said the group expected its fresh-cut fruit and ready-to-eat veg arm Renaissance Food Group to enjoy higher sales and margins.
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“Our avocado operations are poised for continued expansion, indicative of the upward consumption trends of an industry that is growing at a significant pace,” Cole said. “On the subject of growth, RFG’s revenues have nearly tripled since being acquired by the company in fiscal 2011, while the business segment’s gross margin has risen about four times. Building upon initiatives both in place and in progress, we expect RFG to achieve double-digit revenue and gross-margin growth once again in fiscal 2016.”
The forecasts came alongside Calavo’s results for the year to the end of October. The company booked net income of US$27.2m, up from $97,000 a year earlier. It made an operating income of $43.7m, versus a loss of $16.5m the previous year. Net sales increased 9.5% to $856.8m.
The company did see downward pressure on avocado prices during its fourth quarter, which led to sales and margins from its fresh division falling year-on-year.
Calavo’s earnings per share for the fourth quarter of $0.28 – up from a loss per share of $0.08 a year earlier – were also below Wall Street estimates of $0.45.
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By GlobalDataBB&T Capital Markets analyst Brett Hundley said: “Thus far in Q1, pricing has stabilised and we believe profitability has improved. That said, there could be temporary dislocations going forward and we will monitor market conditions. Importantly, there has not been a deleterious structural change to the avocado business and while there may be temporary disruptions at times, the overall trend will be higher as volumes more than anything will dictate the direction of total profits for that business.”
