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Pandemic drops Del Monte first quarter profits

(Del Monte Photo) Net sales for Del Monte Fresh Produce’s Gold pineapples were $102.1 million in the first quarter of 2020, compared with $111.3 million in the prior year period. Volume was 16% lower. Pricing was 9% higher. Unit cost was 6% higher.

In the first quarter that ended March 27, Del Monte Fresh Produce says the COVID-19 pandemic had a noticeable impact on first quarter sales, to the tune of $27 million in the company’s fresh and value-added and banana business segments.

Net sales for the first quarter were $1.1180 billion, compared with $1.1542 billion the previous year.

Sales also were affected by a voluntary product recall by Mann Packing in the fourth quarter of 2019, as sales have not yet returned to pre-recall levels.

“We were challenged across our global operations during the first quarter of 2020 as we navigated through the headwinds created by the COVID-19 pandemic,” said Mohammad Abu-Ghazaleh, chairman and CEO, in a news release. “Beginning in January in Asia and ramping up in March, our sales were impacted across all of our markets.”

“Near-term demand in our foodservice distribution channel, net sales of higher price point products such as pineapples, avocados and fresh-cut fruit and vegetables remain challenging, but we remain committed to serving our customers without interruption,” he said.

First quarter gross profit was $68.5 million, compared with $95.1 million the previous year. Inventory write-downs related to the pandemic affected gross profit by an estimated $8 million.

Selected product performance included:

  • Gold pineapple – Net sales were $102.1 million, compared with $111.3 million in the prior year period. Volume was 16% lower. Pricing was 9% higher. Unit cost was 6% higher.
  • Fresh-cut fruit – Net sales, volume and pricing were in line with the prior year period. Unit cost was 1% higher.
  • Fresh-cut vegetables – Net sales were $102.9 million, compared with $118.7 million in the prior year period. Volume was 12% lower. Pricing was 2% lower. Unit cost was 5% higher.
  • Avocados – Net sales were $93.5 million, compared with $88.6 million in the prior year period. Volume decreased 21%. Pricing increased 33%. Unit cost was 44% higher.
  • Vegetables – Net sales were $39.3 million, compared with $41.5 million in the prior year period. Volume decreased 6%. Pricing was in line with the prior year period. Unit cost was 9% higher.
  • Non-tropical fruit – Includes the Company’s grape, apple, citrus, berry, pear, peach, plum, nectarine, cherry and kiwi product lines. Net sales were $62.4 million, compared with $61.4 million in the prior year period. Volume increased 9%. Pricing was 7% lower. Unit cost was 8% lower.
  • Prepared food – Includes the Company’s prepared traditional products, and meals and snacks product lines. Net sales decreased in the meals and snacks product line, primarily due to product rationalization in the Company’s subsidiary, Mann Packing combined with the impact of the COVID-19 pandemic and the continuing impact of the 2019 product recall, partially offset by higher net sales in the Company’s prepared traditional product line. Gross profit was impacted by lower sales volume in its meals and snacks product line.
  • Bananas – Net sales for the first quarter of 2020 decreased to $427.0 million, compared with $431.5 million in the first quarter of 2019, principally due to lower net sales in Asia, Europe and North America, partially offset by higher net sales in the Middle East. The Company has estimated that the COVID-19 pandemic has impacted net sales in the banana segment during the first quarter of 2020 by an estimated $6.0 million, as compared to the Company’s expectations for this segment. Volume was 1% higher and worldwide pricing was 2% lower than the prior year. Gross profit for the first quarter of 2020 decreased to $24.5 million, compared with $34.7 million in the first quarter of 2019. Unit cost was 1% higher than the prior year period.

Read the full quarterly earnings report here.

Pamela Riemenschneider is the Retail Editor for Blue Book Services.