A tax charge on Calavo Growers’ operations in Mexico has hit the US fresh produce supplier’s profit growth in the first half of its financial year.
Calavo expects to have to pay US$1.9m after the ruling in Mexico on a dispute centring on the company’s 2004 tax year.
Go deeper with GlobalData
For the six months until 30 April, Calavo’s net income was $5.2m, a 10.6% increase on the corresponding period a year before. Without the tax charge, Calavo’s net income was up 51% at $7.1m.
Second-quarter net income increased from $2.4m to $2.5m. Excluding the charge, net income would have jumped 84% to $4.4m.
Chairman, president and CEO Lee Cole said: “We were deeply disappointed by the ruling of the Mexican appellate court, which we and our legal counsel believe was unsupported by the facts. Despite this unwarranted non-recurring expense, by virtually all financial yardsticks Calavo registered an outstanding performance in the fiscal 2012 second quarter.”
Operating income jumped 87% in the second quarter to $7.1m. In the first half of the financial year, operating income was up 54% at $11.5m.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataSecond-quarter revenue was up 17% at $118.7m, which helped drive a 22% increase over the first six months of the company’s fiscal year to $256.4m.
“As we turn the corner into the second half of the fiscal year with operating momentum squarely behind Calavo, we foresee a continued strengthening picture ahead,” Cole said.
“In the fresh segment, the company will benefit in the third quarter from its peak packing period for California avocados, with the expected large volume driving production efficiencies and further gross margin improvement. The supply of Mexican-grown avocados at more favorable prices compared to a year ago, supplementing strong domestic fresh fruit production, positions Calavo well to capitalise on expanding consumer demand.
“We anticipate that the beneficial market conditions in Mexico will continue translating to lower fruit costs in our prepared avocado conditions and, as a result, we expect to see strong—likely record—margins in the segment.”
He added: “I am enormously confident in the multiple revenue and profit engines driving Calavo. We are executing our business agenda extremely well against the ambitious targets we set for ourselves. We have considerable operational and financial strength, as well as a breadth of other resources, at our disposal. With so much to build upon, I am optimistic that the company will register record operating results in fiscal 2012, with net income and per share results at new all-time highs before the effect of the Mexican tax charge.”
Click here for the full release from Calavo.
