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Fresh Del Monte's Quarterly Income Rises

Source: Fresh Del Monte Produce Inc.
30/07/2013

Jul. 30, 2013 - Fresh Del Monte Produce Inc. today reported financial results for the quarter ended June 28, 2013. The Company reported earnings per diluted share of $1.10 for the second quarter of 2013, compared with earnings per diluted share of $0.99 in the second quarter of 2012.

Excluding asset impairment and other charges, and a non-comparable item, adjusted earnings per diluted share were $1.02 in the second quarter of 2013, compared with $1.01 in the second quarter of 2012. The non-comparable item was cash received as a result of a favorable judgment awarded in litigation of $16.6 million, or $0.29 per diluted share.

"We were pleased with the strong top line performance and momentum generated during the second quarter of 2013," said Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer. "Our growth in the second quarter was fundamentally driven by our ability to increase sales through core product line growth, extending our reach in non-conventional delivery channels, expanding our global brand presence, product innovation, and continued consumer demand for healthy, fresh produce. We believe Fresh Del Monte's financial depth and flexibility allows us to continue to leverage these capabilities and strengthen our leadership position in the global fresh produce industry."

Net sales for the second quarter of 2013 were $1,023.9 million, compared with $957.6 million in the prior year period. The increase in overall net sales for the quarter was the result of increased selling prices in all of the Company's business segments and higher sales volume in the Company's banana and other fresh produce business segments.

Gross profit for the second quarter of 2013 was $105.9 million, compared with $116.4 million in the second quarter of 2012. The decrease in gross profit for the quarter was due to higher costs related to the production and procurement of fruit and ocean freight.

Operating income for the second quarter of 2013 was $51.2 million, compared with $69.8 million in the prior year period. Excluding asset impairment and other charges, the Company had operating income of $63.1 million in the second quarter of 2013, compared with operating income of $70.8 million in the second quarter of 2012. The decrease in operating income was primarily due to lower gross profit.

Net income for the second quarter of 2013 was $62.0 million, compared with $57.2 million in the second quarter of 2012. Excluding asset impairment and other charges, and non-comparable items, the Company had net income of $57.3 million in the second quarter of 2013, compared with net income of $58.2 million in the second quarter of 2012.

 
Fresh Del Monte Produce Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(U.S. dollars in millions, except share and per share data) - (Unaudited)
       
Quarter ended Six months ended
 
Income Statement:

June 28,
2013

June 29,
2012

June 28,
2013

June 29,
2012

Net sales $ 1,023.9 $ 957.6 $ 1,942.7 $ 1,855.5
Cost of products sold 918.0   841.2   1,738.2   1,626.7  
Gross profit 105.9 116.4 204.5 228.8
 
Selling, general and administrative expenses 43.0 45.6 88.3 91.0
Gain (loss) on disposal of property, plant and equipment 0.2 0.5 (1.4 )
Asset impairment and other charges, net (1) 11.9   1.0   12.0   1.1  
Operating income 51.2 69.8 104.7 135.3
 
Interest expense, net 0.7 0.8 1.3 1.9
Other (income) expense, net (2) (17.5 ) 3.1   (15.9 ) 2.6  
 
Income before income taxes 68.0 65.9 119.3 130.8
 
Provision for income taxes 6.0   7.4   15.5   9.5  
Net income $ 62.0   $ 58.5   $ 103.8   $ 121.3  
 
Less: Net income attributable to noncontrolling interests   1.3   0.7   1.6  
Net income attributable to Fresh Del Monte Produce Inc. $ 62.0   $ 57.2   $ 103.1   $ 119.7  
 
Net income per ordinary share attributable to
Fresh Del Monte Produce Inc. - Basic $ 1.10   $ 0.99   $ 1.81   $ 2.07  
 
Net income per ordinary share attributable to
Fresh Del Monte Produce Inc. - Diluted $ 1.10   $ 0.99   $ 1.80   $ 2.07  
 
Dividends declared per ordinary share $ 0.125   $ 0.10   $ 0.25   $ 0.20  
 
Weighted average number of ordinary shares:
Basic 56,236,088   57,905,312   56,914,299   57,856,208  
Diluted 56,580,815   57,995,333   57,290,793   57,948,057  
 
Selected Income Statement Data:
Depreciation and amortization $ 17.2   $ 17.3   $ 34.7   $ 35.1  
 
Non-GAAP Measures:
Reported net income per share - Diluted $ 1.10 $ 0.99 $ 1.80 $ 2.07
Asset impairment and other charges, net (1) 0.21 0.02 0.21 0.02
Favorable settlement of litigation (2) (0.29 )   (0.29 )  
Adjusted net income per share - Diluted (3) $ 1.02   $ 1.01   $ 1.72   $ 2.09  
 
  1. Asset impairment and other charges, net, for the quarter and six months ended June 28, 2013 related principally to asset impairment related to previously announced exit activities in Brazil, asset impairments related to underperforming assets in Costa Rica and charges related to the closure of an under-utilized distribution center in Germany. Asset impairment and other charges, net, for the second quarter of 2012 related principally to an under-utilized facility in the United Kingdom. Asset impairment and other charges, net for the six months ended June 29, 2012 related principally to an under-utilized facility in the United Kingdom and the sale of assets previously impaired in 2011 as a result of our melon program rationalization in Central America.
  2. Favorable judgment awarded in litigation for the second quarter of 2013 for $16.6 million.
  3. Management reviews adjusted net income, adjusted net income per share and adjusted gross profit and considers these measures relevant to investors because management believes they better represent the underlying business trends and performance of the Company.
 
Fresh Del Monte Produce Inc. and Subsidiaries
Business Segment Data
(U.S. dollars in millions) - (Unaudited)
     
Quarter ended
June 28, 2013   June 29, 2012
Segment Data:                    
Net Sales Gross Profit Net Sales Gross Profit
 
Banana $ 457.0 45 % $ 34.7 33 % $ 424.9 45 % $ 37.5 32 %
Other Fresh Produce 478.3 46 % 62.0 58 % 453.8 47 % 65.9 57 %
Prepared Food 88.6   9 % 9.2   9 % 78.9   8 % 13.0   11 %
$ 1,023.9   100 % $ 105.9   100 % $ 957.6   100 % $ 116.4   100 %
 
Six months ended  
June 28, 2013 June 29, 2012
 
Net Sales Gross Profit Net Sales Gross Profit
 
Banana $ 863.0 44 % $ 65.2 32 % $ 822.4 44 % $ 76.4 33 %
Other Fresh Produce 912.0 47 % 121.3 59 % 874.9 47 % 126.1 55 %
Prepared Food 167.7   9 % 18.0   9 % 158.2   9 % 26.3   12 %
$ 1,942.7   100 % $ 204.5   100 % $ 1,855.5   100 % $ 228.8   100 %
 
   
Quarter ended Six months ended
Net Sales by Geographic Region:

June 28,
2013

 

June 29,
2012

June 28,
2013

 

June 29,
2012

               
North America $ 540.5 53 % $ 504.7 53 % $ 1,056.9 54 % $ 993.7 54 %
Europe 204.1 20 % 195.4 20 % 386.1 20 % 400.5 21 %
Middle East 136.5 13 % 100.7 11 % 244.4 13 % 181.8 10 %
Asia 131.3 13 % 138.2 14 % 226.7 12 % 241.6 13 %
Other 11.5   1 % 18.6   2 % 28.6   1 % 37.9   2 %
$ 1,023.9   100 % $ 957.6   100 % $ 1,942.7   100 % $ 1,855.5   100 %
 
 
Fresh Del Monte Produce Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(U.S. dollars in millions) - (Unaudited)
   

June 28,
2013

December 28,
2012

 
Assets
Current assets:
Cash and cash equivalents $ 30.8 $ 39.9
Trade accounts receivable, net 356.1 296.1
Other accounts receivable, net 58.6 58.4
Inventories, net 471.5 482.8
Other current assets 53.6   48.8
Total current assets 970.6   926.0
 
Investment in and advances to unconsolidated companies 2.1 2.0
Property, plant and equipment, net 1,034.7 1,024.6
Goodwill 400.9 405.6
Other noncurrent assets 167.7   175.2
Total assets $ 2,576.0   $ 2,533.4
 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 347.3 $ 333.5
Current portion of long-term debt and capital lease obligations 4.1 2.7
Other current liabilities 28.8   26.3
Total current liabilities 380.2   362.5
 
Long-term debt and capital lease obligations 118.7 123.5
Other noncurrent liabilities 213.8   216.0
Total liabilities 712.7   702.0
 
Total Fresh Del Monte Produce Inc. shareholders' equity 1,824.1 1,795.7
Noncontrolling interests 39.2   35.7
Total shareholders' equity 1,863.3   1,831.4
Total liabilities and shareholders' equity $ 2,576.0   $ 2,533.4
 
 
Selected Balance Sheet Data:
Working capital $ 590.4 $ 563.5
Total debt $ 122.8 $ 126.2
 
 
Fresh Del Monte Produce Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(U.S. dollars in millions) - (Unaudited)
  Six months ended

June 28,
2013

 

June 29,
2012

Operating activities:
Net income $ 103.8 $ 121.3
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 34.7 35.1
Amortization of debt issuance costs 0.2 0.8
Asset impairment charges 11.4 1.8
Gain on sale of securities (2.3 )
Gain on sales of property, plant and equipment (0.5 ) (0.5 )
Foreign currency translation adjustment (4.1 ) 0.7
Other changes 7.7 (5.5 )
Changes in operating assets and liabilities:
Receivables (61.4 ) (22.6 )
Inventories 11.4 38.4
Other current assets (7.1 ) (5.5 )
Accounts payable and accrued expenses 28.3 29.2
Other noncurrent assets and liabilities 3.4   0.7  
Net cash provided by operating activities 125.5   193.9  
 
Investing activities:
Capital expenditures (57.3 ) (34.1 )
Proceeds from sales of property, plant and equipment 1.3 6.0
Proceeds from sale of unconsolidated subsidiary 0.2
Purchases of available-for-sale investments (11.0 )
Proceeds from sale of securities available-for-sale 7.8    
Net cash used in investing activities (48.2 ) (38.9 )
 
Financing activities:
Net borrowings (payments) on long-term debt (4.6 ) (173.0 )
Contributions from noncontrolling interests 3.6 5.0
Proceeds from stock options exercised 19.6 4.5
Excess tax benefit from stock-based compensation 4.0
Dividends paid (14.3 ) (11.6 )
Repurchase of shares (92.2 )  
Net cash used in financing activities (87.9 ) (171.1 )
 
Effect of exchange rate changes on cash 1.5   1.2  
 
Net decrease in cash and cash equivalents (9.1 ) (14.9 )
Cash and cash equivalents, beginning 39.9   46.9  
Cash and cash equivalents, ending $ 30.8   $ 32.0  
 

Second Quarter 2013 Business Segment Performance

(As reported in business segment data)

Bananas

Net sales for the quarter increased 8% to $457.0 million, compared with $424.9 million in the second quarter of 2012. Worldwide pricing increased $0.33, or 2%, to $15.16 per unit, compared with $14.83 per unit in the second quarter of 2012. Volume was 5% higher. Gross profit for the quarter was $34.7 million, compared with $37.5 million in the second quarter of 2012. Unit costs were 4% higher than the prior year period.

Other Fresh Produce

Net sales for the quarter increased 5% to $478.3 million, compared with $453.8 million in the second quarter of 2012. The increase in net sales was primarily the result of higher sales in the Company's non-tropical and fresh-cut product lines. Gross profit for the quarter was $62.0 million, compared with gross profit of $65.9 million in the prior year period.

Gold pineapple - Net sales decreased 6% to $135.6 million. Volume decreased 5%. Pricing decreased 1%. Unit cost was 1% lower.

Fresh-cut - Net sales increased 7% to $116.7 million. Volume increased 5%. Pricing increased 2%. Unit cost was 3% higher.

Melon - Net sales decreased 4% to $34.5 million. Volume decreased 8%. Pricing increased 4%. Unit cost was 1% higher.

Non-tropical - Net sales increased 22% to $135.3 million. Volume increased 20%. Pricing increased 2%. Unit cost was 6% higher.

Tomato - Net sales increased 9% to $24.7 million. Volume decreased 6%. Pricing increased 16%. Unit cost was 10% higher.

Prepared Food

Net sales for the quarter increased 12% to $88.6 million, compared with $78.9 million in the second quarter of 2012, primarily due to higher sales volume in the Company's canned and processed pineapple product lines. Gross profit for the quarter was $9.2 million, compared with $13.0 million in the second quarter of 2012.

Cash Flows

Net cash provided by operating activities for the first six months of 2013 was $125.5 million, compared with $193.9 million in the same period of 2012.

Total Debt

Total debt decreased from $126.2 million at the end of 2012 to $122.8 million at the end of the second quarter of 2013.



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