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Fresh Del Monte slips up on European banana prices


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Shares in Fresh Del Monte Produce tumbled – temporarily – to their lowest of 2011 after the fruit and vegetables distributor, hit by weak European banana prices, became the second agribusiness group on Tuesday to miss earnings forecasts.

The Florida-based company reported a 2.0% slide, year on year, to $257.1m in European sales in the three months to the start of July, as it suffered the regional slowdown highlighted in results by rival Dole Food last week.

Coupled with higher fuel costs, costs of a shake-up at its melon operations, and a return to paying incomes taxes, after enjoying a writeback a year ago, the European performance dragged earnings 16.3% lower to $35.2m.

"A depressed fresh produce market in Europe characterised by significantly lower banana and pineapple selling prices during the month of June… impacted our financial results," Mohammad Abu-Ghazaleh, Fresh Del Monte’s chairman and chief executive, said.

The earnings, excluding one-off effects, were equivalent to $0.77 a share, below analysts’ estimates of a $0.96-a-share result. The data came minutes after results from Archer Daniels Midland also missed expectations.

Fresh Del Monte shares fell 7% to $22.79 in opening deals in New York, their lowest since December, before recovering some ground to close at $22.45, down 4.8% on the day.

Disease outbreak

European banana prices were, at $1,186 a tonne, down 6.6% in June compared with a year before, according to World Bank data.

The decline has been blamed on poor weather in some countries besides the fallout from the spring’s E. coli outbreak in Germany hurting demand for fresh produce.

Nonetheless, Fresh Del Monte achieved higher revenues in Asia, the Middle East and, in particular, North America, where sales gained 8.0% to $514.0m.

Group sales rose 4.0% to $1.04bn.

http://www.agrimoney.com/news/fresh-del-monte-slips-up-on-european-banana-prices–3429.html

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