FDP - Earnings call transcript Q4 2018 | Fresh Del Monte Produce Inc.

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Operator

Good day, everyone, and welcome to Fresh Del Monte Produce Inc.'s Fourth Quarter and Full Year 2018 Financial Results Call. Today's conference call is being broadcast live over the Internet, and is also being recorded for playback purposes. [Operator Instructions].

For opening remarks and introductions, I would like to turn today's call over to the Vice President, Global Corporate Communications and Investor Relations with Fresh Del Monte Produce, Christine Cannella. Please go ahead, Ms. Cannella.

Christine Cannella

morning, and thank call. full Good our for Marianna. quarter fourth year you, everyone, you and joining Thank XXXX conference

Marianna with Christine Communications am mentioned, President, As Corporate Global Cannella, and Del Fresh Vice Relations Monte Produce. Investor I

morning Mohammad that discussion Officer; Contreras, chance Business press review you via President had in Vice and Financial Chief release Richard Chairman issued the are a me Chief Abu-Ghazaleh, that earlier Joining Officer. Senior and today's Executive and I this was Wire. hope to

You includes visit a to any mention that company's reconciliations measures this we to at copy be we company's SEC. the within for information This and statements the webcast the remind corresponding call website of future We will to as am like statements today's we your forward-looking their include will financial the we that and over of that, the laws. note available call. this securities questions, release review ask most may Safe being the conference Mohammad. for response pleased forward-looking replay may well non-GAAP press today I release in live after recent answers you issued With filings included today, the measures. of the you in also morning website with give federal Harbor freshdelmonte.com, on in to including turn provisions to information Please of call to the I is today's for release GAAP much register would our distribution. press as that our speaking to be

Mohammed Abu-Ghazaleh

us XXXX and Thank reviewing whole, everyone. were as today. setbacks. In and achievements fourth Thank you, the Christine, and morning, frustrating definite you there a quarter some for good joining

Mann and us $XXX the drive over major in in strategy million a increase year's vegetables Let's space last the made value-added sales Packing the XXXX This part billion. The of of diversification product acquisition gave growth. fresh in a player a acquisition begin March $X.X to in to our category. was Company acquisition positives. The with us the foothold led

product global our Mann fresh-cut line, a able makes in are fresh complement lines key basis, on which the fresh-cut sales Our strategy product that despite extremely an both year to this was segments. continues and and growth. tap expand company growth to Packing in meaningful fruit net future year's particularly other to this performance What is tough vegetable our

on during first and production numerous of we our stated have in port port in at I report Costa impacted updates that calls, the and port in year negatively half throughout of XXXX, the Costa the operating the to Rica I'm quarterly prior the happy U.S. year. also in our severe experienced As including by Rica shared sources. new Guatemala I key delays challenges, earlier is two in improved. at were have with operations now you weather we that winter capacity, full across events Guatemala,

inland as of the our in shipping the driver activity compounded to logistics Higher operating and regulations. We costs and trucker continuing the their global across Industry-wide U.S., experienced transportation, constrained XXXX. importance to the shortages during also global business. disruption pressure fuel result bananas this this higher part, with second also our in in reaching considerable costs ocean posing the oversupply in U.S., new in during diversify XX margins, squeezed quarter. of Europe underscores pricing performance selling on bananas years lowest such price Events

beyond. connections our forward. and by how strengthening and essential in Through marketplace to operating innovation, and in our in technology you in drive than ever tomato will track. $XX for we new our expenses Diversification, grower us reduce and the structure approximately point, efficient have Chile become operating a I operation XXXX. confident that to strengthening position million goals, reveals these reviewed it production We difficulty estimate aggressive We this would details. Richard strategic you we strength. to the expenses in right am shifts we made restructured challenges, that XXXX we in your also own year's our more Philippines, respond relationships producer, on more consumer production give action is XXXX Together, by significant our towards financial the After reduced the replacing like I U.S.-based this are strides will with annually. At Mexico. Always,

Richard Contreras

you, Thank morning. good Mohammad, and

was profit gross year, for in $XXX $XXX compared was XXXX. the million compared $XX income compared year, prior earnings with $XX sales For in the were $XXX in per $X.XX diluted was billion prior billion year Operating million share with full in the million per share the year XXXX, million of and XXXX. adjusted of compared $XXX basis, reported $X.X earnings diluted we $X.XX Net income with million and on million with compared an $X.X net XXXX. with in

compared last and million For we loss prior was compared the million the XXXX. $X fourth gross reported quarter year. $XXX $X.XX sales operating of $XX $XX in share in $X.XX $X with year, million and $XX $X year, prior net XXXX. million loss gross of fourth a profit was for million Operating per per in loss of compared an the with million share were loss income quarter, of basis, a compared the of a of Net billion $X net in in on with quarter profit loss with the adjusted was million with compared

Volume cost year. were and quarter loss to were category, In category, $XXX quarter. to food lower And the X%, with in in our million sales other areas loss $XX fresh-cut million year. volume of vegetable million was million sourcing in profit during Unit net category, avocado sales North higher year, was reported. lower. $XXX lower net or were In X% decrease and in of nontropical higher, Mann XX% fresh-cut due pricing higher million sales to compared pricing fourth million X%, The unit worldwide the per from sales quarter lower fourth the increased Unit Now volume compared was in were of was at net banana I'll fruit sales In year. Company. of million million unit gold net Total increased lower, the prices cost as $XX only quarter, decrease and with gross acquisition to and Costa profit during In the in offset X% sales compared pricing million net to X% last XX%, East cost Gross In vegetable increased or business was cost compared selling costs. and $XX primarily with in pricing lower attributable with higher decreased canned $XXX increased was decrease our in the In lines. the prepared to the decreased $X cost our Xx to $XX million industrial The $XXX $XX quarter X%, and in unit higher, primarily unit $XX to to our category, $XXX quarter. to The the $XXX compared million. million $XXX sales Volume sales segment, XX% of prices decreased of pricing net was yields $XX X% fourth was our The decreased and of primarily increased was gross a our In $X lower, pineapple the Overall, driven was gross Middle the prior profit the sales increase volume was quarter. XXXX. our was our sales by for Rica. with of with turn million XX% and we'll business sales net in partially million and X% by cost $XXX increased prices X% box. last result higher. unit X% was segments, unit million XX% XX% decreased in our decreased sales profit to Volume sales year, lower. In the $XX as quarter a prior North profit million pricing gross XX%, unit distribution prices the prior higher year. in million in $XX Europe, selling selling volume or Middle $X due million due of our the in and segment, million our gross fruit. volume. X%, X% America. Packing fourth $XX.XX profit our of cost higher, was In business X% $XX Overall, lower XXXX. America $X unit compared category, lower was category, volume during East fruit during lower. million $X was selling banana sales net net Volume compared $XX our was prior million stone product decreased pineapple to with segment decrease compared XX%, was a fresh million was and lower. produce give of higher. million in pricing lower result fourth quarter XX% the Worldwide to due to million and was and lower. XX%, statistics,

for represented cost third-party our expenses total quarter, of and our banana as Selling, $X which compared and foreign per our result X% bunker bunker of million growers, of the cost represented acquisition year, X% our quarter, X% total expense primarily debt fourth higher general operating cost due and includes $XXX during also cost quarter interest to of At worldwide of to higher, rates. end tax of own with with our the last of Packing first expense total $X Income the to million sales; to $X along during increased the XX% represented was quarter in for a year fruit million, carton the the million million X% for million profit sales; fleet the $XXX,XXX, total to charters to by includes acquisition and a compared the level and expense increased and freight a with administrative $X fourth higher-average currency and level, our of favorable was favorable $X which net As to at increased cost at was impact and The as first Packing. balance X% million. represented due for $XX the quarter the result quarter Mann, the production quarter, of the the million year, from cost during of fuel impact the the was lower cost, $X total prior procurement of fuel income gross our tax last cost Mann XXXX. compared ocean Mann cost, of sales; quarter ton of result loan sales. sales in acquisition by Interest increased cost XX% of of X% was and the total was the earnings.

spending, million As it in XXXX. spent capital relates to $XXX we

$XXX our can XXXX. in over We for This the expect turn approximately million spend concludes call Operator, now review. we to financial Q&A.

Operator

Instructions]. [Operator

Your first from Consumer Jonathan Edge with question Feeney Research. comes

Jonathan Feeney

I Mohammed, maybe priced to up sourcing? something quarter or to fruit little It have seems bit like losses. last losses of market, seems you I a -- me bananas and wanted Or quality right if in versus maybe the pineapples I and like good this see the that and explanation? quarter, a volume it are volume wanted purely here. took pricing the fruit hence, function a of ahead to Is

Mohammed Abu-Ghazaleh

fruit quality as well as rationalizing supplies. more sourcing it's and fruit Actually, our

-- know the you if increased see pineapple tremendously has Rica. in You supply statistics, in Costa from growth that

this of it had and the expecting come been several expecting last been continues XXXX. have quarter point, the have actually this years, started the this one end, markets in I We which that hitting -- will for at by XXXX,

Because As medium-sized very pineapple cost. will my start a more And demand that the we noticed a be bananas. year. end forward. bananas; will go small dominance it's at today, expenditure in And that market, not and their a already and will should and pricing dominant this not say, by we we very we abandoning -- into of producers, let's expect line have of unlike the in speak that any like the position forget supply it's orchards, supplies producers, intensive, are don't lot that compromise capital that improve and expectation as we farmers I

Jonathan Feeney

now second too, Well, to question, what it my relates Mohammed.

that to I'm those investments, -- very just as what the kinds trying if that? it lot and Or You've industry is get you kinds X it made have expenditure pineapple pineapple money, some not port a higher-than-trend just throw investments this well. incremental possible drive taken -- of over others doesn't you're supply that confidence but that's years, spent last it at if infrastructure. a is just capital seems, and have of place too, on gives we everybody's and in significant made, all the the, But to things, just look just others then plantings, things, say, all to return an spending, of really going return? it continues that understand,

Mohammed Abu-Ghazaleh

really -- nobody is What perfect.

in production Philippines, writeoff, have few to took can is look over unrest in most mistakes turmoil, an I -- mean, at the laborers, made last the area years, expectation. as the the we certain We very Philippines which one of influence in that civil see being very sound our you groups -- the in that years and been that's if paying banana more the But try in that from why turmoil. has and especially and much back reasons with actual or as, the of have as investments less, you quarter. last a And

certain most itself, a last distribution fresh-cut they And heavy year, our building a expenditures really project. in acquired we a for and in costly instance, you is Mann Packing new when brand capital Like of year, into Salinas. center by projects. very look If last at already Gonzales, this project, facility were were

and is XXXX that some we that over specifications well. done expand investments So incorrect as the we by as This -- XXXX, more. carryover plant, to facility of into took constructing a big there company, have to done and the one we the we found as had and have layouts the were well in out we and

the that first of that year, One on the since big and banana actually came have last first with started project few the the other production in actually, we were Panama, shipped. week plantations containers last

as look have plantation there the to now, is The at Because compared in will bananas? you variation Panama of forward. forward you when Now, cost are we I tell as go me years production same sourcing that costs do why XXXX terms we and translate significant our in time, third-party forward. well as have one last which here we major Mexico container well, already one already X -- my -- packing these of China, which for business. financing our are ships since investment state-of-the-art year have our avocado and in new are we in constructions ships, big -- going And under our X shed investments, we as

different hopefully, this As Mexico And we speak, we to parties. pack have operating. almost in August, third middle of and in ready plant in year, packinghouses will our by XX sometime different we

years. So going fresh-cut over new we our plus more regular machineries, what which in reduce these increasing to automation, that are reality, drastically new actually investments is It's in like with. do are labor in investments the big we order other all our forward fresh-cut our more cost, that's very and automating operations

all all these, then, year, projects at you a in value see of updating as line, these think about we value once we'll keep -- into in these. you I the and forward forward. -- So But will look added added that if come going we go lot

Jonathan Feeney

that you last production I'll chance. Rica. expect -- Would did the the similar Do say mentioned expect pineapples? abandoning -- something be bananas? as someone in give And what of some with a true pricing see price course limited you question, else of would result -- people that would the Costa And of a you you over quarter, you improved supply

Mohammed Abu-Ghazaleh

be bananas. to cost reduced. so sure, cost you. margins. is what do able itself do But reduce target. we to not is on our production What order be believe by would honest don't in I to with would that reduce like ourselves improve we That's our our Bananas, to trying I'm to are be our

they and the very sustained is sustain losses, pineapple rationalize will business. that if going last because as gone forward. deter many as into go believe forward have go people far pineapple from As continuing by they forward into huge we that this losses expect marketing pineapple I will I during continue, concerned, have as large will losses, year, more distribution in they which And itself

to have we slowly As don't we and can this sustain. coming that's we I that would as mean, And think field. ourselves, our forget, this goal, I game. to different a the we new pineapple are like far will we mean, have maintain that hopefully, in end that completely give a rosy OI I year, believe on different level, certain back perspective come of towards the online, a will which us I which

Operator

Instructions]. [Operator

Yost Ossorio question with next Kane from Capital Management. Your comes

Kane Ossorio

avocado the segment, particular. wondering about in I'm

there. If would there? increased be in anything plans release you pricing XX%, segment, I significant by pretty what's the XX%, dynamics could decreased notable press about but the cost I Is happened unit imagine. or explain margin see to there in a explain impact, which that your

Richard Contreras

continue continue try have avocados, We same, a but We to pass as customer. going top We on the line the not we the gain the having keep to and but to battle do the keep to take pricing constantly on well, market increase you so and share to is pool and growers. buy an to it's -- up cost off, from consumer top market down. all and it's constantly and them everyday margin grow it's along the

Kane Ossorio

it. Got

it share to had So bit you you that that were to to -- retail, market volume? little in pay -- but end more able a potentially just take growers get

Richard Contreras

goes down. up up and It goes It's cyclical. It and down.

Mohammed Abu-Ghazaleh

right at selling. and the It's right the doing moment, about actually buying

ago, minutes improved by hopefully, by buyers. our our be Mexico our increased our do our I our think we costing August that to we're see, year. this in avocado operations and And then, will have We towards and quality that. that continuing few to more a We I packing share business, have starting -- said, the, market and as in would consistency

confident So will we avocado forward. believe a keep this we in and growing and segment, believer are very our we go big as

Operator

Instructions]. [Operator

a You question from have Research. Feeney with Jonathan Edge Consumer

Jonathan Feeney

Sorry.

have more got questions. you some couple If a time, I've guys

Mohammed Abu-Ghazaleh

Sure, go ahead.

Jonathan Feeney

I -- you of the in was Packing? a could in four us remarks, I gross Richard, terms produce to you could give profit the the this fresh contribution what on of but Mann if said sense you've apologize for got other late, about minutes

Richard Contreras

Packing? Mann For

Jonathan Feeney

Yes.

something. year-over-year. pressure contributed Clearly, -- of I'm So what's the gross the to what rate understand Packing organic was Mann trying profit

Mohammed Abu-Ghazaleh

will last As and a think company to matter forward been and I -- during be the business that able we since Mann the in go believe well or during March business doing the we've -- of even do with trying better together, with to it give since figures integrate year, business been XXXX. during Mann. XXXX, we the actually, we more and year, acquired has will notes -- only on just kind as I streamline But very the this we

Jonathan Feeney

on foreign the I on a expected? spot, about that mainly production currency -- was than hedging would effect because cost? strength have profit. bit that how just little how versus Okay. And Is of much the And is that's more the euro gross your that versus

Richard Contreras

that's spot, Jonathan. mostly Yes,

on mostly had So euro, a Costa Rica the impact. sales well. impact, the it also on was as and the cost cost

Jonathan Feeney

it favorable? was So

Richard Contreras

was It favorable.

Jonathan Feeney

on been at I kind kind seems at lot always does question, following way The you've like of mean, think has the business? business right of tough it other any mean to -- supply? the the it the -- -- quarter. fruit the the one I or ended. on business people, all to smaller does it a have going to fantastic for a I'm in business seen been this are bigger or keep the Right. and bigger I the to highlight this or a this guess, Understood. that -- change I performance getting aspirations I get a hands get the Does steadier I right your time. of does up Or open you avocado in get need has guess, mean, in there challenge

Mohammed Abu-Ghazaleh

we a Definitely, Jonathan. we have our bigger market into gaining I much believe -- the business. very business objective is and this we are which to get into speak, share, bigger as

took be keep their player and believe a team we of with to that was big the Mexico. a our in we a I has not during business have supplying that's people, keep with our Fresh at almost our a great avocado were and if one planning job in and customers avocado. avocados, the we not why only, the last weeks, to able of relationship XXX% and now there avocado coming the few, wanted strike, of penetration that year. programs very had to a we not our very strike volumes out was building X lot over, the a we vision, market, -- were buyers not customers, still single -- aligned And of and supplying but in that especially we done our able stuffed done these our keep were fact, that to we were fulfillment, as matter have before through more to foresight continue of was the customers place were and were We even that -- Monte able There noticed the the to it's avocados starting maybe with which Del because the with if for shelves

I very station. it it's give our business, very a once It's especially we that think big I in are consistency. packing which square-foot will confident is avocados, terms and with of very mean, grow So we us sizable. we different this XXX,XXX edge packing, a And about will station. facility, quality And finish

Operator

no questions call turn Mohammad time. further Abu-Ghazaleh now I remarks. the to over are back at There for closing will this

Mohammed Abu-Ghazaleh

speak can call better you the everybody like I that have and a news. with would day. I next much, very nice call, Thank thank this attending hope and on we to for

Operator

conference This concludes call. today's

disconnect. now may You

Fresh Del Monte Produce (FDP) 19 Feb 192018 Q4 Earnings call transcript