Fresh Del Monte Produce Inc. (ticker: FDP, exchange: New York Stock Exchange (.N))
News Release -
28-Oct-2008
Fresh Del Monte Produce Announces Third Quarter 2008 Financial Results Increases in Net Sales, Gross Profit and Operating Income
CORAL GABLES, Fla.--(BUSINESS WIRE)--Oct. 28, 2008--Fresh Del
Monte Produce Inc. (NYSE:FDP) today reported financial results for the
third quarter ended September 26, 2008. The Company reported earnings
per diluted share of $0.46, compared with earnings per diluted share
of $0.51 in the third quarter of 2007. Earnings per diluted share for
the first nine months of 2008, excluding asset impairment and other
charges or credits, net, were $2.40, compared with $2.54 for the first
nine months of 2007, excluding asset impairment and other charges,
net.
Fresh Del Monte's Chairman and Chief Executive Officer, Mohammad
Abu-Ghazaleh said, "In contrast to the unprecedented volatility in the
global economy and financial markets, the third quarter of 2008 was a
period of steady growth and solid performance for Fresh Del Monte
Produce. Our business continued to expand around the world, and
consumers continued to purchase our fresh fruit and vegetables,
including our premium-priced gold pineapple and fresh-cut products.
These factors enabled us to deliver increases in net sales, gross
profit and operating income; strong results in light of the uncertain
global environment which prevailed in the third quarter and continues
today. I believe our performance clearly underscores Fresh Del Monte's
primary strengths: our business strategies, our management team's
execution skills, our well-respected brand, and our balance sheet."
Mr. Abu-Ghazaleh said, "We made significant gains in the third
quarter despite the fact that we continued to experience higher fruit
production, procurement and logistic costs. This quarter's performance
once again demonstrates our mandate to control expenditures, improve
efficiencies, and increase profitability."
He added, "It takes a competitive edge to win in today's markets,
and we are confident that we have the qualities we need to address the
challenges ahead. We have weathered volatile cycles before, and we
believe that our business and brand are well-positioned to perform in
a wide range of economic conditions. The foundation we have created
sets the stage for us to deliver improved shareholder value over the
long term, which has always been our goal."
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 Nine months ended
------------------------- ------------------------
Income Statement: Sept. 26, Sept. 28, Sept. 26, Sept. 28,
2008 2007 2008 2007
------------ ------------ ----------- ------------
Net sales $ 832.9 $ 757.1 $ 2,700.0 $ 2,517.3
Cost of products
sold 753.9 689.3 2,422.4 2,230.8
Other charges (1) - - 2.1 -
------------ ------------ ----------- ------------
Gross profit 79.0 67.8 275.5 286.5
Selling, general
and
administrative
expenses 41.3 41.7 123.5 131.3
Asset impairment
and other charges
(credits), net
(2) (0.2) 0.2 16.0 2.2
------------ ------------ ----------- ------------
Operating income 37.9 25.9 136.0 153.0
Interest expense,
net 3.6 5.6 8.7 22.0
Other income
(expense), net (2.4) 7.3 12.5 11.4
------------ ------------ ----------- ------------
Income before
income taxes 31.9 27.6 139.8 142.4
Provision for
(benefit from)
income taxes 2.6 (2.3) 5.0 (3.0)
------------ ------------ ----------- ------------
Net income $ 29.3 $ 29.9 $ 134.8 $ 145.4
============ ============ =========== ============
Net income per
ordinary share -
Basic $ 0.46 $ 0.52 $ 2.13 $ 2.51
============ ============ =========== ============
Net income per
ordinary share -
Diluted $ 0.46 $ 0.51 $ 2.12 $ 2.50
============ ============ =========== ============
Weighted average
number of
ordinary shares:
Basic 63,553,299 57,995,596 63,279,692 57,821,513
============ ============ =========== ============
Diluted 63,695,040 58,384,312 63,609,428 58,052,393
============ ============ =========== ============
Selected Income
Statement Data:
Depreciation and
amortization $ 21.8 $ 20.4 $ 63.6 $ 59.1
============ ============ =========== ============
Net Income per
Share
Adjustments:
Reported net
income per
share - Diluted $ 0.46 $ 0.51 $ 2.12 $ 2.50
Other charges
(1) - - 0.03 -
Asset impairment
and other
charges
(credits), net
(2) - - 0.25 0.04
------------ ------------ ----------- ------------
Adjusted net
income per
share - Diluted $ 0.46 $ 0.51 $ 2.40 $ 2.54
============ ============ =========== ============
Gross Profit
Adjustments:
Reported gross
profit $ 79.0 $ 67.8 $ 275.5 $ 286.5
Other charges
(1) - - 2.1 -
------------ ------------ ----------- ------------
Adjusted gross
profit $ 79.0 $ 67.8 $ 277.6 $ 286.5
============ ============ =========== ============
(1) Other charges for the nine months ended September 26, 2008 relate
to wages paid to idle workers and write-offs of packaging material
inventory incurred in the second quarter as a result of extensive
flood damage in our banana farms in Brazil.
(2) Asset impairment and other charges (credits), net, for the third
quarter and nine months ended September 26, 2008, relates principally
to flood damage at our banana farms in Brazil, the closure of under-
utilized distribution centers and the previously announced closure of
our beverage production operation in the U.K. and related contract
termination costs and a net benefit related to the previously
announced closing of our Hawaii pineapple operations. Asset
impairment and other charges, net, for the third quarter and nine
months ended September 28, 2007 includes asset impairment charges
related to assets held for sale in Europe and a net benefit related
to the previously announced closing of our Hawaii pineapple
operations.
Fresh Del Monte Produce Inc. and Subsidiaries
Business Segment Data
(U.S. dollars in millions) - (Unaudited)
Quarter ended
-------------------------------------------------------
September 26, 2008 September 28, 2007
--------------------------- ---------------------------
Segment Data:
Net Sales Gross Profit Net Sales Gross Profit
------------- ------------- ------------- -------------
Bananas $ 332.7 40% $ 23.7 30% $ 277.1 37% $ 6.9 10%
Other Fresh
Produce 354.5 43% 45.3 57% 342.3 45% 46.4 68%
Prepared Food 102.4 12% 13.3 17% 106.5 14% 14.1 21%
Other
Products and
Services 43.3 5% (3.3) (4)% 31.2 4% 0.4 1%
-------- ---- ------- ----- -------- ---- -------- ----
Total $ 832.9 100% $ 79.0 100% $ 757.1 100% $ 67.8 100%
======== ==== ======= ===== ======== ==== ======== ====
Nine months ended
-------------------------------------------------------
September 26, 2008 September 28, 2007
--------------------------- ---------------------------
Segment Data:
Net Sales Gross Profit Net Sales Gross Profit
------------- ------------- ------------- -------------
Bananas $1,054.3 39% $ 95.4 35% $ 889.7 35% $ 59.1 21%
Other Fresh
Produce 1,218.0 45% 139.4 50% 1,241.8 49% 184.7 64%
Prepared Food 318.8 12% 38.6 14% 296.8 12% 41.6 15%
Other
Products and
Services 108.9 4% 2.1 1% 89.0 4% 1.1 0%
-------- ---- ------- ----- -------- ---- -------- ----
Total $2,700.0 100% $275.5 100% $2,517.3 100% $ 286.5 100%
======== ==== ======= ===== ======== ==== ======== ====
Quarter ended Nine months ended
--------------------------- ---------------------------
Net Sales by
Geographic September 26, September 28, September 26, September 28,
Region: 2008 2007 2008 2007
------------- ------------- ------------- -------------
North America $ 397.8 48% $339.1 45% $1,251.9 46% $1,182.4 47%
Europe 234.9 28% 243.3 32% 834.2 31% 814.6 32%
Asia 88.5 11% 88.3 12% 306.1 11% 294.8 12%
Middle East 69.4 8% 55.9 7% 204.2 8% 140.6 6%
Other 42.3 5% 30.5 4% 103.6 4% 84.9 3%
-------- ---- ------- ----- -------- ---- -------- ----
Total $ 832.9 100% $757.1 100% $2,700.0 100% $2,517.3 100%
======== ==== ======= ===== ======== ==== ======== ====
Fresh Del Monte Produce Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(U.S. dollars in millions) - (Unaudited)
Nine months ended
---------------------------
September 26, September 28,
2008 2007
------------- -------------
Operating activities:
Net income $ 134.8 $ 145.4
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 63.6 59.1
Asset impairment charges 12.6 5.3
Gain on sale of assets (7.5) (11.8)
Foreign currency translation
adjustment (6.3) 7.4
Other 7.1 (9.1)
Changes in operating assets and
liabilities:
Receivables 43.0 (11.2)
Inventories (20.3) (10.1)
Other current assets (9.1) 4.5
Accounts payable and accrued expenses 32.2 1.0
Other noncurrent assets and
liabilities (8.8) (14.4)
------------- -------------
Net cash provided by operating activities 241.3 166.1
------------- -------------
Investing activities:
Capital expenditures (72.3) (61.8)
Proceeds from sales of assets 16.5 14.8
Purchase of subsidiaries, net of cash
acquired (414.1) -
Other investing activities, net - (2.0)
------------- -------------
Net cash used in investing activities (469.9) (49.0)
------------- -------------
Financing activities:
Net proceeds from (payments on) long-
term debt 207.5 (119.8)
Proceeds from stock options exercised 21.8 10.0
------------- -------------
Net cash provided by (used in) financing
activities 229.3 (109.8)
------------- -------------
Effect of exchange rate changes on cash (2.5) (0.4)
------------- -------------
Net (decrease) increase in cash and cash
equivalents (1.8) 6.9
Cash and cash equivalents, beginning 30.2 39.8
------------- -------------
Cash and cash equivalents, ending $ 28.4 $ 46.7
============= =============
Fresh Del Monte Produce Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(U.S. dollars in millions) - (Unaudited)
September 26, December 28,
2008 2007
------------- ------------
Assets
Current assets:
Cash and cash equivalents $ 28.4 $ 30.2
Trade accounts receivable 318.7 343.3
Other accounts receivables 52.3 70.6
Inventories 449.9 406.9
Other current assets 50.9 36.9
------------- ------------
Total current assets 900.2 887.9
------------- ------------
Property, plant and equipment, net 1,078.5 851.8
Goodwill 418.5 253.2
Other non-current assets 217.1 192.8
------------- ------------
Total assets $ 2,614.3 $ 2,185.7
============= ============
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 399.4 $ 358.5
Current portion of long-term debt and
capital lease obligations 7.2 6.9
Other current liabilities 34.7 31.3
------------- ------------
Total current liabilities 441.3 396.7
------------- ------------
Long-term debt and capital lease
obligations 439.3 231.7
Other noncurrent liabilities 196.5 177.7
------------- ------------
Total liabilities 1,077.1 806.1
------------- ------------
Minority interests 17.5 14.8
Total Shareholders' equity: 1,519.7 1,364.8
------------- ------------
Total liabilities and shareholders'
equity $ 2,614.3 $ 2,185.7
============= ============
Selected Balance Sheet Data:
Working capital $ 458.9 $ 491.2
Total Debt 446.5 $ 238.6
Third Quarter 2008 Results
Net sales for the quarter increased 10% to $832.9 million,
compared with $757.1 million in the third quarter of 2007. Net sales,
compared with the prior year period, increased in the Company's
banana, other fresh produce and other products and services business
segments, primarily due to improved pricing, partially offset by lower
sales in the Company's prepared food business segment.
Gross profit for the quarter was $79.0 million, compared with
gross profit of $67.8 million for the same period last year. For all
business segments, gross profit was impacted by the significantly
higher cost associated with production, procurement and
transportation.
Operating income for the quarter increased 46% to $37.9 million,
compared with $25.9 million, a result of the increase in gross profit.
Net income for the quarter was $29.3 million, compared with $29.9
million in the third quarter of 2007. The decrease in net income
reflects the effect of unfavorable foreign currency exchange in the
third quarter of 2008, and the fact that the third quarter of 2007
included higher gains from the sale of assets and tax benefits.
Third Quarter Business Segment Performance
(As reported in business segment data)
Bananas
Net sales increased 20% to $332.7 million during the quarter.
Volume was up 5% primarily in North America, the result of the
Caribana acquisition in the second quarter of 2008. Worldwide pricing
increased 14% to $13.17 per unit. Gross profit rose to $23.7 million,
due to higher selling prices in North America, the Middle East and
Asia; favorable foreign currency in Asia; and growing demand. The
increase in selling prices was partially offset by 9% higher unit
costs.
Other Fresh Produce
Net sales for the quarter increased 4% to $354.5 million. The
Company's gold pineapple, fresh-cut and melon product lines drove the
increase in net sales. Overall pricing for the segment increased 11%.
However, overall volume decreased by 6%, with an 11% increase in unit
costs. As a result, gross profit decreased 2% to $45.3 million.
-- Gold pineapple - Net sales increased 13% to $122.5 million,
primarily the result of higher sales in North America. Volume
increased 9% for the quarter, primarily due to the Caribana
acquisition. Pricing increased 4% and unit cost increased 12%.
-- Melon - Net sales increased 6% to $32.8 million, primarily the
result of a 7% increase in selling price. Volume and unit cost
were in line with last year's levels.
-- Fresh-cut - Net sales increased 10% to $84.2 million,
primarily the result of increased pricing in North America and
higher sales in the Middle East. Volume rose 4%, mainly due to
increased demand in the Middle East. Pricing increased 5%,
offset by a 9% increase in unit cost.
-- Non-tropical - Net sales were $48.8 million, in line with last
year's levels, as a 7% increase in price was offset by a 7%
decrease in volume. Unit cost decreased 4%.
-- Tomato - Net sales decreased 7% to $31.5 million with a 17%
decrease in volume, a direct result of the salmonella outbreak
in the United States originally linked to tomatoes. Pricing
increased 13%, offset by an 11% increase in unit cost.
Prepared Food
Net sales decreased 4% to $102.4 million for the third quarter,
due to lower sales in the pineapple and beverage product lines,
partially offset by growth in the Company's Middle East poultry and
processed meat businesses. Pricing increased 13%, with a 13% increase
in costs. Operating income improved by $2.0 million, the result of
reductions in selling and marketing costs as the Company shifted to
use of independent distributors.
Other Products and Services
Net sales increased 39% to $43.3 million for the quarter, driven
by increased sales in the Company's Argentina based grain business.
However, the increase in sales was offset by significantly higher
costs of other products and services, resulting in a $3.7 million
decrease in gross profit.
Cash Flow for the Nine Months
Net cash provided by operating activities for the first nine
months of 2008 was $241.3 million, compared with $166.1 million in the
same period of 2007. The increase was primarily due to lower accounts
receivable, driven by increased collections and higher accounts
payables and accrued expenses.
Guatemala Acquisition
In the third quarter of 2008, the Company acquired two melon
operations in Guatemala. These acquisitions further strengthened the
Company's position as a leader in the off-shore melon season, securing
approximately 4.5 million incremental boxes of cantaloupes and
honeydews to be marketed under the Del Monte(R) brand.
Total Debt
Total debt increased from $238.6 million at the end of 2007 to
$446.5 million, a $207.9 million increase, primarily the result of the
Caribana acquisition.
Conference Call and Web Cast Data
Fresh Del Monte will host a conference call and simultaneous Web
cast at 11:00 a.m. Eastern Time today to discuss the third quarter
2008 results and to review the Company's progress and outlook. The Web
cast can be accessed on the Company's Investor Relations home page at
www.freshdelmonte.com. The call will be available for re-broadcast on
the Company's Web site approximately two hours after the conclusion of
the call.
About Fresh Del Monte Produce Inc.
Fresh Del Monte Produce Inc. is one of the world's leading
vertically integrated producers, marketers and distributors of
high-quality fresh and fresh-cut fruit and vegetables, as well as a
leading producer and distributor of prepared food in Europe, Africa
and the Middle East. Fresh Del Monte markets its products worldwide
under the Del Monte(R) brand, a symbol of product innovation, quality,
freshness and reliability for more than 100 years.
Forward-looking Information
This press release contains certain forward-looking statements
regarding the intents, beliefs or current expectations of the Company
or its officers with respect to various matters. These forward-looking
statements are based on information currently available to the Company
and the Company assumes no obligation to update these statements. It
is important to note that these forward-looking statements are not
guarantees of future performance and involve risks and uncertainties.
The Company's actual results may differ materially from those in the
forward-looking statements as a result of various important factors,
including those described under the caption "Key Information - Risk
Factors" in Fresh Del Monte Produce Inc.'s Annual Report on Form 20-F
for the year ended December 28, 2007 along with other reports that the
Company has on file with the Securities and Exchange Commission.
CONTACT:
Fresh Del Monte Produce Inc., Coral Gables
Christine Cannella, Assistant Vice President,
Investor Relations, 305-520-8433
www.freshdelmonte.com
SOURCE: Fresh Del Monte Produce Inc.
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Fresh Del Monte Produce Inc.
