Fresh Del Monte Produce Announces First Quarter 2009 Financial Results

Coral Gables, Fla. Apr. 28, 2009 - Fresh Del Monte Produce Inc. today reported financial results for the first quarter which ended March 27, 2009.

Excluding asset impairment and other charges, net, the Company reported earnings per diluted share of $0.56 for the first quarter of 2009, compared with earnings per diluted share of $1.07 in the first quarter of 2008.

Fresh Del Monte’s Chairman and Chief Executive Officer, Mohammad Abu-Ghazaleh said, “We were pleased to see the progress we made toward our long-term initiatives including strong growth and profitability in our global banana business, an increase in volume of our core products, and excellent strategic improvements in our fresh-cut product category during the quarter.

While we made progress toward our long-term initiatives, our achievements were overshadowed by a number of challenges during the quarter that negatively affected our financial performance. These challenges included severe weather conditions in our banana and gold pineapple production areas in Costa Rica, and in our banana production areas in Guatemala.

These challenges led to disruptions in our operations, a significant decrease in fruit quality, along with higher fruit production and procurement costs. We also experienced a dramatic reduction in our melon category performance, the result of significantly lower melon selling prices, primarily due to an oversupply in the market and the difficult economic environment. In addition, our first quarter results were negatively affected by the strengthening of the U.S. dollar against other currencies.”

Mr. Abu-Ghazaleh added, “As we look forward, we are confident in our ability to deliver the results shareholders have come to expect from Fresh Del Monte. There continues to be a global increase in demand for products that provide consumers with value and are healthy and nutritious. With this in mind, we remain focused on our strategy of maintaining our strong balance sheet, strengthening leadership positions in key products, further building our core product categories, and expanding our brand leadership in world markets. We firmly believe many of the challenges we faced in the quarter were temporary and that our long-term prospects remain bright.”

First Quarter 2009 Results

Net sales for the quarter decreased 2% to $879.7 million, compared with $894.9 million in the first quarter of 2008. The $15.2 million decrease in net sales was primarily due to lower sales in the Company’s prepared food business, principally in the U.K. and other products and services business segment. The decline in net sales was partially offset by higher banana selling prices in the North America, Asia-Pacific and Middle East regions, the result of strong demand for bananas and industry-wide banana shortages.

Gross profit for the quarter was $83.8 million, compared with gross profit of $96.9 million in the first quarter of 2008. The 14% decrease in gross profit was primarily due to lower selling prices in the Company’s other fresh produce business segment, primarily the result of a significant decline in melon selling prices in North America and lower gold pineapple selling prices in Europe. The decrease in gross profit was partially offset by higher gross profit in the Company’s banana business segment.

Operating income for the quarter decreased 18% to $46.9 million, compared with $57.5 million in the prior year, excluding asset impairment and other charges, net, for both periods.

Net income for the quarter was $35.3 million, compared with $68.2 million in the first quarter of 2008, excluding asset impairment and other charges, net for both periods. The decrease in net income reflects lower gross profit and a foreign currency loss of $6.1 million in the first quarter of 2009, compared with a foreign currency gain of $10.9 million in the first quarter of 2008, included in other expense, income, net. The decrease in net income during the first quarter of 2009 was partially offset by lower selling, general and administrative expenses.

First Quarter Business Segment Performance

(As reported in business segment data)

Bananas

Net sales increased 6% to $361.5 million during the quarter, primarily the result of increased selling prices in the North America, Asia-Pacific and Middle East regions, partially offset by lower net sales and unfavorable foreign exchange rates in Europe. Worldwide pricing increased 7% to $14.54 per box. Volume was in line with the prior year period. Unit costs increased 3%, primarily driven by higher fruit production and procurement costs. Gross profit rose 45% to $43.6 million.

Other Fresh Produce

Net sales for the quarter were in line with the prior year period at $419.2 million. The net sales increase in the Company’s melon and gold pineapple product categories was partially offset by lower net sales in the Company’s tomato and fresh-cut product categories. Volume increased 18%. Overall pricing for the segment decreased 15%, with a 9% decrease in unit costs. Gross profit decreased $25.5 million to $27.6 million.

• Gold pineapple – Net sales increased 5% to $106.3 million. Volume increased 20%, primarily due to the Caribana acquisition. Pricing decreased 12%, primarily the result of tightened consumer spending in both North America and Europe, along with unfavorable foreign exchange rates in Europe. Unit cost in gold pineapple increased 5%.
• Melon – Net sales increased 14% to $79.9 million. Volume increased 40%. Pricing decreased 19% and unit cost decreased 4%. The significant reduction in pricing was primarily driven by an oversupply of melons in the market and the weak economy. These factors had a negative effect on melon gross margin.

• Fresh-cut – Net sales decreased 13% to $66.6 million. Volume decreased 7%. Pricing declined 7%, primarily due to unfavorable foreign exchange rates in Europe. Unit cost was 11% lower.
• Non-tropical – Net sales of $100.1 million were in line with last year’s levels. Volume increased 8%. Pricing decreased 8% and unit cost declined 6%.
• Tomato – Net sales decreased 25% to $30.0 million with a 14% decrease in volume. Pricing decreased 13% and unit cost was 17% lower.

Prepared Food

Net sales decreased 25% to $76.8 million for the first quarter, primarily due to lower net sales in the Company’s canned fruit and beverage product categories, primarily in the U.K., along with the negative impact of unfavorable foreign exchange rates in Europe. Pricing increased 10%, with a 4% increase in unit costs. Gross profit rose by $1.0 million.

Other Products and Services

Net sales decreased 34% to $22.2 million for the quarter; primarily driven by lower net sales in the Company’s third-party freight services and Argentine grain businesses. Gross profit decreased by $2.1 million.

Cash Flow for the Full-Year

Net cash provided by operating activities for the first three months of 2009 was $66.5 million, compared with $41.6 million in the same period of 2008. The increase was principally due to lower accounts receivable balances that resulted primarily from reduced advances to growers, partially offset by higher payments for accounts payable and accrued expenses.

Total Debt

Total debt decreased from $512.8 million at the end of 2008 to $493.1 million at the end of the first quarter of 2009.