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Fresh Del Monte Q4, 2020 financial results show lower sales

-Completes 40% of $100 million asset sale optimization program-
-Company continues making progress on its transformation initiatives-
-Company reduces long-term debt by $45 million as compared to the end of 2019-

CORAL GABLES, Fla.–(BUSINESS WIRE)– Fresh Del Monte Produce Inc. BB #:111187 today reported financial results for the fourth quarter and fiscal year 2020.

For the full year 2020, the Company reported earnings per diluted share of $1.03, compared with earnings per diluted share of $1.37 for the full year 2019. Adjusted earnings per diluted share were $1.15 for the full year 2020, compared with adjusted earnings per diluted share of $1.12 for the full year 2019.

The Company reported earnings per diluted share of $0.02 in the fourth quarter of 2020, compared with a loss per diluted share of $0.54 in the fourth quarter of 2019. Adjusted loss per diluted share was $0.08 in the fourth quarter of 2020, compared with adjusted loss per diluted share of $0.45 in the fourth quarter of 2019.

The Company’s Board of Directors declared a cash dividend of ten cents $(0.10) per share, payable on April 2, 2021 to shareholders of record on March 10, 2021.

“In 2020, we benefited from actions taken as part of our $100 million asset sale optimization program, as well as making progress on our five-year strategic initiatives to become a value-added and more diversified Company,” said Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer.

“The emphasis on selling non-strategic, underutilized assets, and strengthening our core businesses led to improved cash flow and reduced debt. These efforts along with our versatile, vertically-integrated platform helped us mitigate the effects of disruptions, including weather and the COVID-19 pandemic. We are also proud of the progress we made in the following areas in the midst of a global pandemic, we placed in service four of our six new container vessels that we expect will increase our efficiency and reduce our carbon footprint; we opened a new state-of-the-art Mann Packing facility in California, merging four facilities into one; and opened a new state-of-the-art distribution and fresh-cut facility in Yokohama, Japan. Also, we benefited from our new avocado packing facility that opened in December 2019.”

“We are optimistic that with an improved balance sheet, and our strategic focus on value-added products to respond to the shift in delivery channels driven by the trend towards a ‘stay-at-home economy’ we will continue to see gains in our performance during 2021. Our goal, as always, is to deliver shareholder value over the long-term,” Abu-Ghazaleh added.

Net sales for the full year 2020 were $4,202.3 million, compared with $4,489.0 million in 2019. The decrease in net sales for 2020 were the result of lower net sales in all of the Company’s business segments.

The COVID-19 pandemic impacted net sales during the full year 2020 by an estimated $303.6 million in the Company’s fresh and value-added and banana business segments, as compared with the Company’s full year 2019 performance.

Partially offsetting the decrease in overall net sales was the Company’s fiscal year cycle which consisted of a 53-week year for fiscal 2020 as compared to a 52-week year for fiscal 2019, resulting in an estimated $72.0 million increase in net sales.

Net sales for the fourth quarter of 2020 were $1,002.3 million, compared with $1,025.2 million in the fourth quarter of 2019. The COVID-19 pandemic impacted net sales during the fourth quarter of 2020 by an estimated $71.0 million in the Company’s fresh and value-added and banana business segments, as compared with the fourth quarter of 2019.

The decrease in net sales in the fourth quarter of 2020 was due to lower net sales in the Company’s fresh and value-added and banana business segments, partially offset by higher net sales in the Company’s other products and services business segment and also due to the $72.0 million impact of an additional week in the quarter.

Gross profit for the full year 2020 was $250.9 million, compared with gross profit of $306.4 million in 2019. Adjusted gross profit was $284.0 million for the full year 2020, compared with adjusted gross profit of $317.6 million for the full year 2019. The change in gross profit was driven by lower gross profit in all of the Company’s business segments, primarily the result of lower sales volume and sales prices in the Company’s fresh and value-added and banana business segments.

Gross profit was also impacted by incremental costs, mainly due to other-product related charges of $33.6 million, partially offset by lower production costs. These charges primarily consist of inventory write-offs due to the volatile supply and demand conditions caused by the COVID-19 pandemic and related incremental costs incurred for additional cleaning and social distancing protocols, as well as inventory write-offs resulting from damages to the Company’s operations in Guatemala due to hurricanes Eta and Iota in the fourth quarter of 2020.

Gross profit in the fourth quarter of 2020 was $36.4 million, compared with gross profit of $37.5 million in the fourth quarter of 2019. Adjusted gross profit was $49.1 million in the fourth quarter of 2020, compared with adjusted gross profit of $47.9 million in the fourth quarter of 2019.

The change in gross profit in the fourth quarter of 2020 was the result of lower gross profit in the Company’s banana and other products and services business segments, partially offset by higher gross profit in the Company´s fresh and value-added business segment. Gross profit in the fourth quarter of 2020 was also impacted by incremental costs, mainly related to other-product related charges of $12.7 million.

These charges primarily consist of inventory write-offs due to the volatile supply and demand conditions caused by the COVID-19 pandemic and related incremental costs incurred for additional cleaning and social distancing protocols, as well as inventory write-offs resulting from damages to the operations in Guatemala due to hurricanes Eta and Iota in the fourth quarter of 2020.

Operating income for the full year 2020 was $76.5 million, compared with an operating income of $114.1 million in 2019. Adjusted operating income for the full year 2020 was $88.5 million, compared with $113.2 million in 2019. The change in operating income for the full year 2020 was primarily attributable to lower gross profit, partially offset by lower asset impairment and other charges, net, lower selling general and administrative expenses, and higher gains on disposal of property, plant and equipment, net.

Operating loss for the fourth quarter of 2020 was $0.9 million, compared with operating loss of $11.5 million in the fourth quarter of 2019, primarily due to the disposal of property, plant and equipment, net, partially offset by higher asset impairment and other charges, net and higher selling, general and administrative expenses. Adjusted operating loss for the fourth quarter of 2020 was $4.5 million, compared with an adjusted operating loss of $5.6 million in the fourth quarter of 2019. The change in adjusted operating income for the fourth quarter of 2020 was primarily attributable to higher adjusted gross profit.

Net income attributable to Fresh Del Monte Produce Inc. for the full year 2020 was $49.2 million, compared with a net income of $66.5 million in 2019. Adjusted net income was $54.8 million for the full year 2020, compared with adjusted net income of $54.6 million in 2019.

Net income attributable to Fresh Del Monte Produce Inc. for the fourth quarter of 2020 was $0.9 million, compared with net loss of $25.8 million in the fourth quarter of 2019. Adjusted net loss was $3.7 million for the fourth quarter of 2020, compared with adjusted net loss of $21.2 million in the fourth quarter of 2019. The change to net income for the full year 2020 reflects lower operating income, partially offset by lower income tax provision. The fourth quarter of 2020 reflects the impact of higher operating income.

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