Fresh Del Monte has seen its profitability squeezed in the opening quarter of the year (Q1), despite a year-on-year increase in net sales.
The fresh produce multinational reported that operating income had dropped from US$65.2m in the opening quarter of 2014 to US$56.3m, while net income was down to US$42.5m from US$58.6m.
This was despite net sales jumping above the US$1bn mark, driven by higher net sales in the company's banana and other fresh produce segements – primarily driven by increased sales volumes in North America.
“We are pleased to report that we continued to make progress toward our long-term initiatives during the first quarter of 2015, with positive growth in our banana business, increased volume in several product lines in our other fresh produce business and strategic improvements in the prepared food business in Europe,” said Mohammad Abu-Ghazaleh, chairman and CEO. “However, we faced a number of challenges that reduced our ability to deliver optimal earnings. Significantly higher fruit procurement costs in the banana segment, lower pineapple yields, along with tomato and grape quality issues, which were brought about by several adverse weather-related events around the world. Our global market reach and logistics flexibility allowed us to better manage these factors. Additionally, we faced unfavorable year-over-year exchange rates.
'The positive trends, initiatives, and strategic steps to improve profitability during the quarter mitigated the setbacks, and I am confident we will continue to deliver sustainable growth over the long-term,' he added.
