US fruit and veg group Fresh Del Monte Produce posted a drop in first quarter net profit today (28 April), hurt by a foreign currency loss, weak melon prices and severe weather conditions.
For the three months to 27 March the company earned US$34.9m compared with $63.6m a year earlier.
The figure was impacted by a foreign currency loss of $6.1m in the first quarter of 2009, compared with a foreign currency gain of $10.9m in 2008.
Net sales was also down and fell 2% to $879.7m from $894.9m a year ago. The $15.2m decrease was primarily due to lower sales in the company’s prepared food business, principally in the UK and other products and services business segment.
This was partially offset however, by higher banana selling prices in the North America, Asia-Pacific and Middle East regions, the result of strong demand for bananas and industry-wide banana shortages.
Operating income for the quarter decreased 18% to $46.9m, compared with $57.5m in the prior year.
Despite this, banana sales increased 6% to $361.5m during the quarter, and worldwide pricing increased 7% to $14.54 per box.
“While we made progress toward our long-term initiatives, our achievements were overshadowed by a number of challenges during the quarter that negatively affected our financial performance,” said Del Monte’s chairman and CEO Mohammad Abu-Ghazale. “These challenges included severe weather conditions in our banana and gold pineapple production areas in Costa Rica, and in our banana production areas in Guatemala. These challenges led to disruptions in our operations, a significant decrease in fruit quality, along with higher fruit production and procurement costs.
“We firmly believe many of the challenges we faced in the quarter were temporary and that our long-term prospects remain bright,” Ghazale added.