FRESH DEL MONTE PRODUCE INC Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Product Segments: Pineapples, fresh-cut fruit, and avocados performed well. Pineapples: solidified global leadership, expanding production/sourcing and launched Ruby Glow pilot. Fresh-cut: investments in automation, expanding in club retail/e-commerce. Avocados: expanding global sourcing despite supply chain challenges.
• Banana Business: Launched Somalia banana project, with 350 hectares planted in Q4 2024 and plans to expand to 500-1,000 hectares by end of 2025.
• Regulatory Compliance: Ahead of FSMA 204 compliance, on track for January 2026 deadline, strengthening risk management and efficiency.
• Sustainability: Biomass initiative to monetize byproducts, awarded SEAL Environmental Initiative Award for emissions reduction ahead of schedule.
• Financials: Net sales, gross profit, margins, and EPS improved. Dividend increased for third consecutive year, long-term debt reduced.

Segment Performance

• Fresh and Value-Added Product Segment: Net sales in full year 2024 were $2.607 billion, up from $2.478 billion prior year. Driven by higher per unit selling prices and volume in avocado, pineapple, and Mylan product lines. Gross profit was $243 million (up from $167 million), with a gross margin of 9.3% (up from 6.8%).
• Banana Segment: Net sales in full year 2024 were $1.476 billion, down from $1.638 billion prior year. Due to lower sales, higher production/procurement costs, and exchange rate impacts. Gross profit was $87 million (down from $163 million), with a gross margin of 5.9% (within the forecasted 5%-7% range).
• Other Products and Services Segment: Net sales in full year 2024 were $197 million, down from $205 million prior year. Driven by sale of plastics subsidiary but up in poultry/meat. Gross profit was $28 million (up from $20 million), with a gross margin of 14.1% (exceeding expectations).

Guidance

• 2025 net sales projected 2% higher than prior year, driven by avocado, pineapple, fresh-cut fruit, and bananas; partially offset by lower net sales in fresh-cut vegetable and vegetable lines.
• Fresh and Value-Added segment gross margin expected 10%-11%, Banana segment gross margin expected 5%-7%, Other Products and Services segment gross margin expected 12%-14%.
• SG&A expenses expected $205 million-$210 million, capital expenditures $80 million-$90 million, net cash provided by operating activities expected $190 million-$200 million.

Risks

• Weather-related challenges in early 2025 affecting production volumes of bananas and pineapples.
• Potential international tariffs on imports, adding trade volatility and impacting sourcing and costs.

Question and Answer

Q: Mitch Pinheiro asks about pineapple supply constraints, fresh-cut fixed cost leverage, and avocado tariffs.

A: Mohammad Abu-Ghazaleh states pineapple plantations are expanding in Costa Rica and Brazil with disease-resistant varieties; Monica Vicente says pineapple pricing will be strong. Abu-Ghazaleh addresses avocado sourcing diversification and the Somalia banana project's benefits in reducing transport times and expanding markets.