Fresh produce giant Fresh Del Monte has reported a decline in net sales to $4.2 billion (€3.5 billion) in its financial year 2020, from $4.5 billion (€3.7 billion) in 2019.
It attributed this decline to lower net sales in all of its business segments due to the pandemic.
However, the company is optimistic about its performance in 2021 and expects to see gains in the new financial year.
Chairman and chief executive of Fresh Del Monte, Mohammad Abu-Ghazaleh, said, "We are optimistic that with an improved balance sheet, and our strategic focus on value-added products to respond to the shift in delivery channels driven by the trend towards a 'stay-at-home economy' we will continue to see gains in our performance during 2021. Our goal, as always, is to deliver shareholder value over the long-term."
Fresh Del Monte estimated a year-on-year net sales decline of $303.6 million for its fresh and value-added and banana divisions for the financial year 2020.
It was partially offset by the company's fiscal year cycle, which consisted of a 53-week year in 2020 compared to a 52-week year in 2019, the company said. This resulted in an estimated $72.0 million increase in net sales.
Divisional Performance
Net sales in the fresh and value-added products division amounted to $2.5 billion in 2020, down from $2.7 billion in 2019.
The decline resulted from lower net sales in fresh-cut vegetables, fresh-cut fruit, avocados, vegetables, melons, prepared food products and tomato product lines.
It was partially offset by higher net sales in the company's non-tropical fruit and pineapple product lines.
The banana division generated $1.6 billion, down from $1.7 million in 2019.
The decline followed lower net sales in North America and Europe. It was partially offset by higher net sales in the Middle East and Asia.
In terms of geographies, North America accounted for 62% of net sales ($2.6 million), followed by Europe (16%), Asia (11%), the Middle East (10%), and other markets (1%).
Gross Profit
The gross profit for the financial year amounted to $250.9 million, down from $306.4 million in 2019, driven by lower gross profit in all of its business segments.
It primarily resulted from lower sales volume and sales prices in the fresh and value-added, and banana business segments.
Gross profit was also impacted by incremental costs, mainly due to other product-related charges of $33.6 million, partially offset by lower production costs, Fresh Del Monte added.
These charges primarily comprised inventory write-offs due to the volatile supply and demand conditions due to the COVID-19 pandemic and related incremental costs incurred for additional cleaning and social distancing protocols.
It also includes inventory write-offs resulting from damages to the company's operations in Guatemala due to hurricanes Eta and Iota in the fourth quarter of 2020.
Adjusted gross profit stood at $284.0 million for the full year 2020, down from $317.6 million in the previous financial year.
'Asset Sale Optimisation Programme'
Abu-Ghazaleh explained, "In 2020, we benefited from actions taken as part of our $100 million asset sale optimisation programme, as well as making progress on our five-year strategic initiatives to become a value-added and more diversified Company.
"The emphasis on selling non-strategic, underutilised assets, and strengthening our core businesses led to improved cash flow and reduced debt. These efforts, along with our versatile, vertically-integrated platform, helped us mitigate the effects of disruptions, including weather and the COVID-19 pandemic."
© 2021 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: The European Supermarket Magazine.
