Fresh Del Monte Produce Announces Third Quarter 2008 Financial Results
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Source: Fresh Del Monte Produce Inc.
28/10/2008
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Coral Gables, Fla., Oct. 28 - Fresh Del Monte Produce Inc. 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.”
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| Fresh Del Monte Produce Inc. and Subsidiaries |
| Condensed Consolidated Statements of Income |
| (U.S. dollars in millions, except share and per share data) - (Unaudited) |
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Quarter ended |
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Nine months ended |
| Income Statement: |
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Sept. 26, |
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Sept. 28, |
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Sept. 26, |
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Sept. 28, |
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2008 |
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2007 |
|
2008 |
|
2007 |
| Net sales |
|
$ |
832.9 |
|
|
$ |
757.1 |
|
|
$ |
2,700.0 |
|
$ |
2,517.3 |
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| Cost of products sold |
|
|
753.9 |
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|
|
689.3 |
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|
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2,422.4 |
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2,230.8 |
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| Other charges (1) |
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- |
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|
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- |
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2.1 |
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- |
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| Gross profit |
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79.0 |
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67.8 |
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275.5 |
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286.5 |
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| Selling, general and administrative expenses |
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41.3 |
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41.7 |
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123.5 |
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131.3 |
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| Asset impairment and other charges (credits), net (2) |
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(0.2 |
) |
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0.2 |
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16.0 |
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2.2 |
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| Operating income |
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37.9 |
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25.9 |
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136.0 |
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153.0 |
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| Interest expense, net |
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3.6 |
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5.6 |
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8.7 |
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22.0 |
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| Other income (expense), net |
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(2.4 |
) |
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7.3 |
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12.5 |
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11.4 |
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| Income before income taxes |
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31.9 |
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27.6 |
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139.8 |
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142.4 |
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| Provision for (benefit from) income taxes |
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2.6 |
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(2.3 |
) |
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5.0 |
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(3.0 |
) |
| Net income |
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$ |
29.3 |
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$ |
29.9 |
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$ |
134.8 |
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$ |
145.4 |
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| Net income per ordinary share - Basic |
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$ |
0.46 |
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$ |
0.52 |
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$ |
2.13 |
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$ |
2.51 |
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| Net income per ordinary share - Diluted |
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$ |
0.46 |
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$ |
0.51 |
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$ |
2.12 |
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$ |
2.50 |
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| Weighted average number of ordinary shares: |
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| Basic |
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63,553,299 |
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57,995,596 |
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63,279,692 |
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57,821,513 |
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| Diluted |
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63,695,040 |
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58,384,312 |
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63,609,428 |
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58,052,393 |
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| Selected Income Statement Data: |
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| Depreciation and amortization |
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$ |
21.8 |
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$ |
20.4 |
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$ |
63.6 |
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$ |
59.1 |
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| Net Income per Share Adjustments: |
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| Reported net income per share - Diluted |
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$ |
0.46 |
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$ |
0.51 |
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$ |
2.12 |
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$ |
2.50 |
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| Other charges (1) |
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- |
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- |
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0.03 |
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- |
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| Asset impairment and other charges (credits), net (2) |
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- |
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- |
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0.25 |
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0.04 |
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| Adjusted net income per share - Diluted |
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$ |
0.46 |
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$ |
0.51 |
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$ |
2.40 |
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$ |
2.54 |
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| Gross Profit Adjustments: |
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| Reported gross profit |
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$ |
79.0 |
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$ |
67.8 |
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$ |
275.5 |
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$ |
286.5 |
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| Other charges (1) |
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- |
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- |
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2.1 |
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- |
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| Adjusted gross profit |
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$ |
79.0 |
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$ |
67.8 |
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$ |
277.6 |
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$ |
286.5 |
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| (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. |
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| (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. |
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| Fresh Del Monte Produce Inc. and Subsidiaries |
| Business Segment Data |
| (U.S. dollars in millions) - (Unaudited) |
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Quarter ended |
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September 26, 2008 |
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September 28, 2007 |
| Segment Data: |
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Net Sales |
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Gross Profit |
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Net Sales |
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Gross Profit |
| Bananas |
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$ |
332.7 |
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40 |
% |
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$ |
23.7 |
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30 |
% |
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$ |
277.1 |
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37 |
% |
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$ |
6.9 |
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10 |
% |
| Other Fresh Produce |
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354.5 |
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43 |
% |
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45.3 |
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57 |
% |
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342.3 |
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45 |
% |
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46.4 |
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68 |
% |
| Prepared Food |
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|
102.4 |
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12 |
% |
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|
13.3 |
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|
17 |
% |
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|
106.5 |
|
14 |
% |
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|
14.1 |
|
21 |
% |
| Other Products and Services |
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|
43.3 |
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5 |
% |
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(3.3 |
) |
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(4 |
)% |
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|
31.2 |
|
4 |
% |
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|
0.4 |
|
1 |
% |
| Total |
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$ |
832.9 |
|
100 |
% |
|
$ |
79.0 |
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|
100 |
% |
|
$ |
757.1 |
|
100 |
% |
|
$ |
67.8 |
|
100 |
% |
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Nine months ended |
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September 26, 2008 |
|
September 28, 2007 |
| Segment Data: |
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Net Sales |
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Gross Profit |
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Net Sales |
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Gross Profit |
| Bananas |
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$ |
1,054.3 |
|
39 |
% |
|
$ |
95.4 |
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|
35 |
% |
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$ |
889.7 |
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35 |
% |
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$ |
59.1 |
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21 |
% |
| Other Fresh Produce |
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1,218.0 |
|
45 |
% |
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|
139.4 |
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50 |
% |
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1,241.8 |
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49 |
% |
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|
184.7 |
|
64 |
% |
| Prepared Food |
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|
318.8 |
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12 |
% |
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38.6 |
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|
14 |
% |
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|
296.8 |
|
12 |
% |
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|
41.6 |
|
15 |
% |
| Other Products and Services |
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|
108.9 |
|
4 |
% |
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|
2.1 |
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|
1 |
% |
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|
89.0 |
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4 |
% |
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1.1 |
|
0 |
% |
| Total |
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$ |
2,700.0 |
|
100 |
% |
|
$ |
275.5 |
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|
100 |
% |
|
$ |
2,517.3 |
|
100 |
% |
|
$ |
286.5 |
|
100 |
% |
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Quarter ended |
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Nine months ended |
| Net Sales by Geographic Region: |
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September 26,
2008 |
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September 28,
2007 |
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September 26,
2008 |
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September 28,
2007 |
| North America |
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$ |
397.8 |
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48 |
% |
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$ |
339.1 |
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|
45 |
% |
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$ |
1,251.9 |
|
46 |
% |
|
$ |
1,182.4 |
|
47 |
% |
| Europe |
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|
234.9 |
|
28 |
% |
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|
243.3 |
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|
32 |
% |
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|
834.2 |
|
31 |
% |
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|
814.6 |
|
32 |
% |
| Asia |
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|
88.5 |
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11 |
% |
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|
88.3 |
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|
12 |
% |
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|
306.1 |
|
11 |
% |
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|
294.8 |
|
12 |
% |
| Middle East |
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|
69.4 |
|
8 |
% |
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|
55.9 |
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|
7 |
% |
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|
204.2 |
|
8 |
% |
|
|
140.6 |
|
6 |
% |
| Other |
|
|
42.3 |
|
5 |
% |
|
|
30.5 |
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|
4 |
% |
|
|
103.6 |
|
4 |
% |
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|
84.9 |
|
3 |
% |
| Total |
|
$ |
832.9 |
|
100 |
% |
|
$ |
757.1 |
|
|
100 |
% |
|
$ |
2,700.0 |
|
100 |
% |
|
$ |
2,517.3 |
|
100 |
% |
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| |
| Fresh Del Monte Produce Inc. and Subsidiaries |
| Condensed Consolidated Statements of Cash Flows |
| (U.S. dollars in millions) - (Unaudited) |
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Nine months ended |
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September 26, |
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September 28, |
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|
2008 |
|
2007 |
| Operating activities: |
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|
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| Net income |
|
$ |
134.8 |
|
|
$ |
145.4 |
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|
Adjustments to reconcile net income to net cash provided by operating activities: |
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|
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| Depreciation and amortization |
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|
63.6 |
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|
59.1 |
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| Asset impairment charges |
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|
12.6 |
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5.3 |
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| Gain on sale of assets |
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|
(7.5 |
) |
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(11.8 |
) |
| Foreign currency translation adjustment |
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|
(6.3 |
) |
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7.4 |
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| Other |
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|
7.1 |
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|
(9.1 |
) |
| Changes in operating assets and liabilities: |
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| Receivables |
|
|
43.0 |
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|
(11.2 |
) |
| Inventories |
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|
(20.3 |
) |
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|
(10.1 |
) |
| Other current assets |
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|
(9.1 |
) |
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|
4.5 |
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| Accounts payable and accrued expenses |
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|
32.2 |
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|
1.0 |
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| Other noncurrent assets and liabilities |
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|
(8.8 |
) |
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|
(14.4 |
) |
| Net cash provided by operating activities |
|
|
241.3 |
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|
166.1 |
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| Investing activities: |
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| Capital expenditures |
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(72.3 |
) |
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|
(61.8 |
) |
| Proceeds from sales of assets |
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|
16.5 |
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|
14.8 |
|
| Purchase of subsidiaries, net of cash acquired |
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|
(414.1 |
) |
|
|
- |
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| Other investing activities, net |
|
|
- |
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|
(2.0 |
) |
| Net cash used in investing activities |
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|
(469.9 |
) |
|
|
(49.0 |
) |
|
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|
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| Financing activities: |
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|
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| Net proceeds from (payments on) long-term debt |
|
|
207.5 |
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|
(119.8 |
) |
| Proceeds from stock options exercised |
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|
21.8 |
|
|
|
10.0 |
|
| Net cash provided by (used in) financing activities |
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|
229.3 |
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|
(109.8 |
) |
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| Effect of exchange rate changes on cash |
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|
(2.5 |
) |
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(0.4 |
) |
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| Net (decrease) increase in cash and cash equivalents |
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|
(1.8 |
) |
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|
6.9 |
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| Cash and cash equivalents, beginning |
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|
30.2 |
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|
|
39.8 |
|
| Cash and cash equivalents, ending |
|
$ |
28.4 |
|
|
$ |
46.7 |
|
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| Fresh Del Monte Produce Inc. and Subsidiaries |
| Condensed Consolidated Balance Sheets |
| (U.S. dollars in millions) - (Unaudited) |
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September 26, |
|
December 28, |
|
|
2008 |
|
2007 |
| Assets |
|
|
|
|
| Current assets: |
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|
|
| 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 |
|