Fresh cut fruit and vegetables group Fresh Del Monte Produce has posted a 3% decline in net sales for the fourth quarter to US$737.6m. Net sales for the year fell by 1% to $3.21bn.
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The company recorded a net loss of $59.9m for the fourth quarter of 2006, against a net loss of $3.5m in the fourth quarter of 2005. For the full year, it posted a net loss of $145.1m, compared with net income of $106.6m in 2005.
Fresh Del Monte Produce said the decrease in profitability for the full year was attributable to $148.3m in asset impairment and restructuring charges; significant increases in procurement and logistics costs; lower sales volume and selling prices of bananas in Europe; and higher advertising and interest expense.
The company attributed the fourth-quarter and annual sales declines to the continued rationalisation of its “other fresh produce” business segment, primarily in the North America vegetable product line; underperformance of its prepared food business, resulting from competitive pressures in the UK and lower supply of canned pineapple during the Christmas holiday in Europe; and lower sales volume and lower selling prices of bananas in Europe.
“By every measure, 2006 was the most challenging year in nearly a decade,” said chairman and CEO Mohammad Abu-Ghazaleh. “We faced higher input costs, a difficult banana market in Europe, and lingering issues in our prepared food business. We responded to these conditions by implementing a host of strategic measures to lower their negative impact on our business. We closed underperforming operations, eliminated unprofitable products, managed our banana supply in key regions, drove improved performance in our tomato and fresh-cut operations, and leveraged our strengths in emerging markets.”
Abu-Ghazaleh added that during the final month of 2006, these efforts had begun to have a positive effect on the company’s business, and this positive effect was still being seen in 2007. “We are optimistic that we will see a significant turnaround in our business in 2007,” he said.
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By GlobalData“In the meantime, we continue to manage our business to offset those uncontrollable cost factors that can negatively impact our operations. This includes looking for additional ways to streamline our business, conserve our resources, and address the challenges from our prepared food business. Our goal, as always, is to deliver improved shareholder value over the long term.”
