CORAL GABLES, Fla.--(BUSINESS WIRE)--Feb. 24, 2009-- Fresh Del Monte Produce Inc. (NYSE:FDP) today reported financial results for the fourth quarter and year ended December 26, 2008. Excluding asset impairment and other charges, net, the Company reported earnings per diluted share of $0.41 for the fourth quarter of 2008, compared with earnings per diluted share of $0.68 in the fourth quarter of 2007. Excluding asset impairment and other charges, net, earnings per diluted share for the full year were $2.82, compared with earnings per diluted share of $3.22 for the full year of 2007.

Fresh Del Monte’s Chairman and Chief Executive Officer, Mohammad Abu-Ghazaleh, said, “During an extremely difficult economic environment, our solid fourth quarter performance is further evidence of our ongoing commitment to mitigate costs and drive productivity throughout our global organization. Despite the difficult environment, we remained focused on the fundamentals that are critical to our success; prudently managing costs while investing in profitable core products and emerging markets that we believe will generate attractive returns for our shareholders over the long-term.”

Mr. Abu-Ghazaleh added, “The uncertainty in the global economy will continue to present obstacles. However, despite the challenging conditions, we are fortunate to have one of the most talented teams in the industry, possessing an unrelenting focus on growth, the bottom line and our continuous cost savings program. I am extremely optimistic about Fresh Del Monte’s ability to weather the current global uncertainty. It is our focus on operational efficiencies and pricing initiatives to address these challenging market conditions that gives me confidence we will continue to meet our objectives. We have a tested business model that includes a diverse product line and a successful vertically-integrated platform; the financial strength to pursue opportunities to further expand our geographic production and sourcing capabilities, and increase brand exposure in emerging markets.”

Fourth Quarter 2008 Results

Net sales for the quarter decreased 2% to $831.0 million, compared with $848.2 million in the fourth quarter of 2007. The $17.2 million decrease in net sales was primarily the result of lower sales in the Company’s prepared food business segment. The decline in prepared food sales was the result of an operational decision to shift to third-party distributors in the fourth quarter of 2007, which resulted in an initial inventory sale of $31.2 million in that period. Excluding the initial inventory sale to third-party distributors in 2007, net sales for the 2008 fourth quarter increased $14.0 million or 2%, compared with the prior year period. The increase in net sales was primarily driven by higher banana selling prices in the North America, Asia-Pacific and the Middle East regions, due to continued strong demand for bananas, along with industry-wide banana shortages. The increase was partially offset by the weakening of currencies against the U.S. dollar in selling countries.

Gross profit for the quarter was $69.4 million, compared with gross profit of $75.4 million in the fourth quarter of 2007, excluding other charges, net, for both periods. The decrease in gross profit was primarily the result of lower selling prices and higher input costs in the Company’s gold pineapple product category, and lower profitability in the Company’s melon product category, a result of decreased demand in Europe and North America, partially offset by higher banana gross profit.

Operating income for the quarter increased 2% to $30.4 million, compared with $29.9 million in the prior year, excluding asset impairment and other charges, net, for both periods.

Net income for the quarter was $26.2 million, compared with $41.7 million in the fourth quarter of 2007, excluding asset impairment and other charges, net for both periods. The decrease in net income in the fourth quarter of 2008 reflects the reduction in gross profit and absence of foreign exchange gains in 2008, and gains from the sale of assets in the fourth quarter of 2007. The decrease in net income during the fourth quarter of 2008 was partially offset by lower selling and marketing expenses, primarily due to shifting to third-party distributors in the Company’s European prepared food business.

Asset impairment and other charges, net, for the fourth quarter of 2008, relate primarily to asset impairment and clean up charges as a result of extensive flooding in the Company’s banana operations in Costa Rica. Asset impairment and other charges, net, for the fourth quarter of 2007, included asset impairment charges related to exit activities in Europe, North and South America, and a credit related to insurance proceeds from the Company’s Kenya product withdrawal and disposal program.

Fourth Quarter Business Segment Performance

(As reported in business segment data)

Bananas

Net sales increased 18% to $365.8 million during the quarter, primarily the result of increased selling prices in the Company’s North America, Asia-Pacific and Middle East regions. The significant gain in pricing in these regions was partially offset by the impact of lower selling prices in the Company’s European region. Worldwide pricing increased 15% to $13.14 per box. Volume was up 3%, primarily in North America. Pricing and volume gains were partially offset by a 9% increase in unit costs, driven by higher fruit procurement and production expenses. Gross profit rose by $20.4 million.

Other Fresh Produce

Net sales for the quarter decreased 8% to $341.9 million, largely attributable to lower sales in the Company’s tomato, fresh-cut and melon product categories. Volume decreased 5%. Overall pricing for the segment decreased 4%, with a 3% increase in unit costs. As a result, gross profit decreased by $24.2 million to $31.7 million.

• Gold pineapple – Net sales increased 2% to $115.4 million. Volume increased 13%, primarily due to the Caribana acquisition. Pricing decreased 10%, primarily in Europe, and unit cost increased 8%.
• Melon – Net sales decreased 10% to $60.5 million, primarily the result of an 8% decrease in selling prices, due to lower demand. Volume and unit cost were in line with last year’s levels.
• Fresh-cut – Net sales decreased 11% to $66.3 million. Volume decreased 12%, driven primarily by the economic downturn. Pricing increased 2%, offset by a 4% increase in unit cost.
• Non-tropical – Net sales of $37.8 million were in line with last year’s levels. Volume increased 16%. Pricing decreased 15% and unit cost declined 10%. The decrease in pricing and unit cost was due to increased supply and lower demand.
• Tomato – Net sales decreased 27% to $30.1 million with a 21% decrease in volume. Pricing and unit cost decreased 7% and 12%, respectively.

Prepared Food

Net sales decreased 29% to $93.6 million for the fourth quarter. The decrease in sales for the fourth quarter of 2008 reflects the effect of outsourcing distribution in the Company’s European region in the fourth quarter of 2007, recording an initial inventory sale of $31.2 million for that period. Pricing increased 33%, with a 32% increase in costs. Operating income rose by $4.0 million, due to reductions in selling, general and administrative expenses, the direct result of shifting sales to third-party distributors.

Other Products and Services

Net sales decreased 11% to $29.7 million for the quarter, driven by decreased sales in the Company’s Argentine grain business, the result of worldwide reductions in grain selling prices. Gross profit decreased by $1.3 million.

Cash Flow for the Full-Year

Net cash provided by operating activities for the full-year of 2008 was $215.6 million, compared with $152.5 million in the same period of 2007. The increase was primarily due to lower accounts receivable balances, mainly the result of improved collections.

Total Debt

Total debt increased from $238.6 million at the end of 2007 to $512.8 million at the end of 2008, primarily the result of the Caribana and Guatemala acquisitions.

Conference Call and Webcast Data

Fresh Del Monte will host a conference call and simultaneous Webcast at 11:00 a.m. Eastern Time today to discuss the 2008 fourth quarter and full-year results and the Company’s outlook. The Webcast 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® 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 10-K for the year ended December 26, 2008 along with other reports that the Company has on file with the Securities and Exchange Commission.

Source: Fresh Del Monte Produce Inc.

Fresh Del Monte Produce Inc., Coral Gables
Christine Cannella, Assistant Vice President, Investor Relations, 305-520-8433
www.freshdelmonte.com