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October 29, 2020

Fresh Del Monte targets $100m from planned asset sales

Fresh Del Monte Produce has said it plans to sell "non-strategic and under-utilised assets" across its geographical reach following a strategic review of its business.

By Dean Best

Fresh Del Monte Produce, the US-based fresh fruit and vegetables supplier, said it aims to raise around US$100m from the planned sale of “non-strategic and under-utilised assets” following a strategic review of its business.

Under the review completed in September, the California-based firm said it had identified certain assets and plants across its geographical reach to be disposed of over the next 12 to 18 months as it seeks to boost efficiencies across its global operations.

“These assets consist primarily of under-utilised facilities and land across multiple regions,” said president and CEO Mohammad Abu-Ghazaleh in a statement announcing its third-quarter results. In the meantime, we remain aggressively focused on optimising our current cost structure, improving our profitability, and prioritising our capital investments.” 

In the first instance, Fresh Del Monte has put assets, primarily related to its fresh and value-added products, on the market valued at $35.4m, a spokesperson for Fresh Del Monte confirmed.

They consist of facilities and related assets in the Middle East and the US valued at $19.2m, along with vacant land in Saudi Arabia and Mexico to the tune of $19.2m. 

Another $4.7m consists of an office, farm land and associated assets in Chile, and $3.4m of farm land and associated assets in Asia and Central America. The remaining $0.8m relates to a “refrigerated vessel”, Fresh Del Monte said.

In the first nine months of its fiscal year to 25 September, the company said it received $2.1m from the sale of surplus land in Chile, and “recorded a gain on disposal of property, plant and equipment net of $1.7m”.

And Fresh Del Monte said it has completed a deal to sell a facility in the Middle East and associated assets for $15.4m spread over five years, with cash proceeds of $7.1m already received.

For the third quarter, Fresh Del Monte reported a 7.5% drop in sales to $989.7m from a year earlier. North America and Europe were the largest contributors with sales of $619.4m and $150m, respectively. Asia generated $107.9m, the Middle East $102.7m, and other regions $9.7m.

The Covid-19 impact on sales during the quarter was estimated at $73m and was “primarily attributable to volatile supply and demand conditions resulting from the pandemic, as well as reduced demand in the company’s foodservice business and shifting demand at retail”, the company said.

Group operating profits and net income also declined, with the former coming in at $26.6m, a decrease of 1.8%. Net income fell 11% to $16.2m.

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