US avocado producer-marketer Calavo Growers has reported a fall in its third-quarter profits due to higher fruit costs in the Calavo Foods business segment, as well as the effects of a smaller supply of fresh avocados on the market.
According to a press release from the group, Calavo’s net income fell from US$5.9m to US$2.7m in the three months to the end of July, while operating income also more than halved, contracting from US$9.8m to US$4.5m.
“Most significantly, the limited supply of avocados drove up fruit costs overall, and specifically, in our prepared avocado business, where fruit prices have risen by more than 70 per cent from last year's third quarter,” chairman, president and CEO Lee Cole said.
“This factor accounts for the majority of the decrease in our third-quarter operating results year over year. Secondarily, the cyclically lower volume of fresh avocados from California resulted in moving fewer overall units, which reduced production efficiencies and increased our per-unit packing costs.”
Despite the poor results, Cole said Calavo expects a “significant operating performance improvement” next year due to a “long-term expansion of avocado supply” from the fourth quarter onwards.
The increase in costs during the third quarter offset Calavo’s “record” quarterly revenues, with third-quarter net sales increasing by 44 per cent to US$165.1m due to “sharply higher” avocado sales and the first contribution from US fresh food company Renaissance Food Group, which Calavo acquired in May.
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