Covid-19 hits Del Monte Q1 results

Fresh Del Monte Produce has said that its sales and net result took a hit in the first quarter (Q1) of the year as it battled against the global impact of the coronavirus pandemic.

The group said that net sales fell from US$1.154bn in the opening quarter of 2019 to US$1.118bn this year, with all business segements enduring lower sales.

The Covid-19 outbreak impacted net sales by approximately US$27m, Del Monte revealed, in its fresh and value-added and banana business segments, when compared with its expectations for these segments.

In addition, the impact of a voluntary product recall at the company's subsidiary, Mann Packing, in the fourth quarter of 2019 continued to hurt net sales in the fresh and value-added business segment during the quarter as volumes 'have not returned to pre-recall levels'.

Ultimately, net income attributable to Del Monte for Q1 2020 was US$13m, falling from US$36.1m in the previous year, primarily the result of lower operating income and the decrease in other income, net, partially offset by lower provision for income taxes.

“We were challenged across our global operations during the first quarter of 2020 as we navigated through the headwinds created by the Covid-19 pandemic,” said Mohammad Abu-Ghazaleh, chairman and CEO. “Beginning in January in Asia and ramping up in March, our sales were impacted across all of our markets.

'However, the company's global presence in the retail fresh produce industry, the diversity of our product portfolio and the efficiency and flexibility of our operations enabled us to quickly adapt to the Covid-19 pandemic,' he continued. 'Near-term demand in our foodservice distribution channel, net sales of higher price point products such as pineapples, avocados and fresh-cut fruit and vegetables remain challenging, but we remain committed to serving our customers without interruption.

'In terms of liquidity, we believe our cash on hand, availability under our credit facility and cash flows from operations will be sufficient to manage our operations.”

By segment, banana sales fell to US$427m from US$431.5m in the same quarter of 2019, principally due to lower net sales in Asia, Europe and North America, partially offset by higher net sales in the Middle East.

For bananas, Del Monte estimated that the COVID-19 pandemic had impacted net sales by an estimated US$6m.

In the company's fresh and value-added segement, sales dropped to US$660.9m from US$690m, with coronavirus hitting the sector by around US$21m.

'The Company expects that volatility in the supply and demand for its products and reduced demand in its foodservice distribution channel will continue to adversely impact its results of operations in the second quarter of 2020,' the group stated. 'The extent of the impact of the Covid-19 pandemic on the company's financial performance, including the ability to execute on the company's strategic initiatives, will depend on future developments, including the duration and spread of the pandemic and related government restrictions, all of which are uncertain and cannot be predicted.'