The chief executive of fresh produce giant Fresh Del Monte, Mohammad Abu-Ghazaleh, has said that the group is reaping the benefits from its focus towards more value-added products, as well as the ongoing diversification of the business.
Net sales for the group's first half were $2.393 billion (€2.15 billion), the group reported, up from $2.378 billion for the same half the previous year. Gross profit was $189.6 million, up from $184.8 million a year earlier.
Strategic Shift
"Our stronger financial performance during the second quarter of 2019 signals that our recent strategic shift towards becoming a value-added and more diversified Company is the right direction for Fresh Del Monte,” Abu-Ghazaleh commented.
“We believe that our movement away from being a volume based business helped us navigate the challenges of adverse weather and low industry volumes far better than we would have in the past," he added. "Rather than struggle against less-than-ideal market conditions, we are focused on ways to position Fresh Del Monte for further growth opportunities that we believe will drive profitability, and increase shareholder value over the long-term.”
The group said that its increase in gross profit was due to higher profitability in all of its business segments, primarily due to the higher selling price for bananas in Europe and Asia, as well as higher selling prices in the fresh and added-value business segment.
It noted that increased fruit production costs as well as procurement and ocean freight costs, offset its profit gains, while unfavourable exchange rates also impacted profits.
Segment Performance
Within its Fresh and Value-Added Products division, gross profit was $58.1 million in the second quarter of the year, compared to gross profit of $51.3 million in the same period last year
Within this division, Avocados saw the biggest increase in sales, to $121.4 million in the second quarter, which was driven by a pricing increase in the category of 37%.
Within the group's Bananas division, gross profit was $35 million, compared to $23.8 million for the same period last year.
North America accounted for 66% of the group's sales in the second quarter, followed by Europe (14%), Asia (10%) , Middle East (9%) and Other markets (1%).
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
