Earnings call transcript: Fresh Del Monte Q2 2025 sees growth in net sales and profit margins

Fresh Del Monte Produce Inc. reported its financial results for the second quarter of 2025, showcasing an increase in net sales and profit margins. The company announced net sales of $1.183 billion, a 4% increase year-over-year, and a gross profit of $120 million, up 6% from the previous year. According to InvestingPro analysis, the company appears slightly undervalued at its current market capitalization of $1.94 billion. The earnings call highlighted several strategic initiatives and market trends that are shaping the company’s outlook.

Key Takeaways

• Net sales increased by 4% year-over-year to $1.183 billion.
• Gross margin improved to 10.2% from 9.9% last year.
• The company launched new products, including the Pink Glow pineapple in the UAE.
• Fresh Del Monte faces challenges in banana supply due to Black Sigatoca disease.

Company Performance

Fresh Del Monte’s Q2 2025 performance reflects steady growth, with net sales and gross profit both seeing year-over-year increases. The company’s strategic focus on expanding its product lines and enhancing global logistics appears to be paying off, as evidenced by the improved gross margin. With a healthy current ratio of 2.05 and an impressive Altman Z-Score of 8.74, InvestingPro data indicates strong financial stability. The introduction of innovative products like fresh guacamole and the expansion of fresh-cut product lines globally are notable highlights. For detailed insights into Fresh Del Monte’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Financial Highlights

• Revenue: $1.183 billion, up 4% year-over-year
• Gross Profit: $120 million, up 6% year-over-year
• Gross Margin: 10.2%, up from 9.9% last year
• Net Income: $57 million, up 5.6% year-over-year
• Diluted EPS: $1.18, compared to $1.12 in the previous year
• Adjusted EBITDA: $95 million, up from $89 million

Outlook & Guidance

Looking forward, Fresh Del Monte expects a 2% growth in net sales for 2025. The company projects gross margins of 10-11% for its Fresh/Value-Added segment and 5-7% for its Banana segment. Capital expenditure for the year is anticipated to be between $70-80 million. InvestingPro analysis shows the stock has delivered an impressive 51.17% return over the past year, with a moderate P/E ratio of 13.13 and an attractive dividend yield of 3.33%. Despite challenges in banana supply, demand across core products is expected to remain stable. Get access to more exclusive ProTips and in-depth analysis by subscribing to InvestingPro.

Executive Commentary

Mohammad Abu Ghazali, a key executive, expressed optimism about the pineapple market, stating, "We see a very strong pineapple market going forward." Monica Vicente highlighted the significance of the second quarter, noting, "The second quarter is historically our strongest period." Addressing supply challenges, Abu Ghazali mentioned, "We are working on several fronts to find a solution to Black Sigatoca."

Risks and Challenges

• Supply Chain Issues: Port congestion in Costa Rica could impact logistics.
• Disease Impact: Black Sigatoca disease poses a threat to banana production.
• Market Saturation: Increased competition in tropical fruit markets may pressure prices.
• Economic Conditions: Global economic fluctuations could affect consumer spending on premium products.

Fresh Del Monte’s strategic initiatives and strong financial performance in Q2 2025 position it well for future growth, despite the challenges posed by global supply chain disruptions and agricultural diseases. The company’s focus on product innovation and market expansion remains a key driver of its positive outlook.

Full transcript - Fresh Del Monte Produce Inc BATS (FDP) Q2 2025:

Desiree, Conference Call Operator, Fresh Del Monte Produce: Good day, everyone, and welcome to Fresh Del Monte Produce Second Quarter twenty twenty five Earnings Conference Call. Today’s conference call is being broadcast live over the Internet and is also being recorded for playback purposes. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer For opening remarks and introductions, I would like to turn today’s call over to the Vice President, Investor Relations with Fresh Del Monte Produce, Ms. Christine Canela.

Please go ahead, Canela.

Christine Canela, Vice President, Investor Relations, Fresh Del Monte Produce: Thank you, Desiree. Good day, everyone, and thank you for joining our second quarter twenty twenty five conference call. Joining me in today’s discussion are mister Mohammad Abu Ghazali, chairman and chief executive officer and miss Monica Vicente, senior vice president and chief financial officer. I hope that you had a chance to review the press release that was issued earlier via Business Wire. You may also visit the company’s IR website at investorrelations.freshdelmonte.com to access today’s earnings materials and to register for future distributions.

This conference call is being webcast live on our website and will be available for replay after this call. Please note that our press release and our call today include non GAAP measures. Reconciliations of these non GAAP financial measures are set forth in the press release and earnings presentation, which is available on our website. I would like to remind you that much of the information we will be speaking to today, including the answers we give in response to your questions, may include forward looking statements within the Safe Harbor provisions of the federal securities laws. In today’s press release and in our SEC filings, we detail risks that may cause our future results to differ materially from these forward looking statements.

Our statements are as of today, July 30, and we have no obligation to update any forward looking statement we may make. During the call, we will provide a business update along with an overview of our second quarter twenty twenty five financial results followed by a question and answer session. With that, I will turn today’s call over to mister Mohammad Abu Ghazali. Please go ahead.

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: Thank you, Christine, and thank you for joining us for our second quarter two two thousand twenty five earning call. The 2025 delivered another period of strong performance for Fresh Del Monte, continuing the momentum we have built through consistent execution and strategic discipline. This quarter historically our strongest of the year saw growth across key financial metrics. Net sales increased by 4%, gross profit rose 6% compared with the prior year period and gross margin expanded to 10.2% from 9.9% compared with the same period last year. This quarter’s positive results reflect the power of consistency and continuous improvement across our fresh cut business and ongoing demand for our pineapple portfolio.

Much of this growth reflects a long term shift in the pineapple category, one we helped lead. In the nineteen seventies, Americans consumed less than a pound of pineapple per day per person. Today, that number is nearly eight times higher according to the USDA. This transformation began with our 1996 launch of Del Monte Gold, the first widely available sweet pineapple and continues through the strength of our proprietary offerings and value added formats. We know that consumers are engaging more with pineapples.

According to Canter World Panel, a leading provider of real household purchase insights, consumer spend on tropical fruit has risen 58% since 02/2017, outpacing overall produce growth and signaling the rising relevance of the category itself. As a pioneer in this space, we are well positioned to lead. Demand for our pineapple portfolio remains strong and continues to outpace supply, driven by trusted brands like Honey Glow and Ping Glow, which is the result of decades of agronomic leadership and targeted investments. We’re managing global supply carefully, strengthening continuity, and taking steps to ensure consistent availability for our customers. We also launched PingGlow in The United Arab Emirates during the quarter, marking our first sustained market entry for a variety in The Middle East.

While still early in scale, it reflects a strategic step in expanding our high value portfolio into new international markets where brand distinction and long term potential align. We also know that when it comes to pineapples, convenience matters. Demand accelerates when product is fresh cut, prepared, and ready to enjoy. As more consumers around the world prioritize health, flavor, and ease, our ability to meet that demand with the right product mix and the operation agility to deliver it is driving meaningful growth across our fresh cut business. We’re also continuing to advance our efforts in high margin value added business ventures, particularly those focused on residues and specialty ingredients.

These projects are still in their early stages, but we believe they represent real long term opportunities. Like many in the industry, we are managing disruptions at the Port Of Caldera in Costa Rica. Unusual unusually strong ocean swells, the worst that we have seen in decades, have severely limited vessel access. With minimal structural protection, the port has become a choke point leading to wait times of three to five days and increased congestion. The result is higher cost and broader logistical impact across the industry.

While the situation remains difficult, our teams are responding with urgency, adjusting schedules, reallocating shipments, and doing everything possible to maintain continuity for our customers. Before I go, I believe it’s important to discuss an industry wide situation regarding bananas, one that I have been predicting a warning about for years. There is a global shortage in banana production. Because it’s unclear, Shifting climate patterns, particularly warmer temperatures combined with humidity, are accelerating the spread of disease in key growing regions, primarily Black Scatogia. On top of that, the continued spread of the cerium well known as tropical race four is adding further pressure.

These diseases are having a direct impact on supply. Black Sykatogue is affecting crops across Central America, while other countries are facing the compounded impact of both diseases. As we have shared previously, our r and d teams have been working to address the global threat posed by Proserium World, and we are pleased to report that field testing of t r four resistant gene additive banana lines is expected to begin in the coming months, a meaningful step toward long term category resilience. Meanwhile, global demand for bananas remains strong as they continue to be one of the most affordable and accessible fruits in the grocery aisle. We’re already seeing a clear imbalance between supply and demand, and we anticipate this would remain a key industry dynamic in the quarters ahead.

With that, I will turn it over to Monica to discuss our second quarter twenty twenty five results in detail. Monica?

Monica Vicente, Senior Vice President and Chief Financial Officer, Fresh Del Monte Produce: Thank you, Mr. Abu Ghazeli, and good morning, everyone, and thank you for joining us on today’s call. I’ll begin with our second quarter financial results followed by our outlook for the rest of the year. As Christine mentioned, our press release and our call today include non GAAP measures. Reconciliations of these non GAAP financial measures are set forth in the press release and earnings presentation, is available on our website.

The second quarter is historically our strongest period. Having said that, this quarter reflects our continued efforts to expand our margins by focusing on improving our product mix. Now let’s go through the financial results. Net sales were 1,183,000,000 compared with $1,140,000,000 in the prior year, an increase of 4%. The increase was driven by higher net sales in our fresh and value added products and banana segments due to higher per unit selling prices and favorable impact of fluctuations in exchange rates, primarily related to euro, Japanese yen, British pound.

The increase also reflects tariff related price adjustments in North America. Gross profit for the second quarter was $120,000,000 compared with $113,000,000 in the prior year. The increase was driven by higher net sales in our fresh and value added product segment, partially offset by higher per unit production and procurement costs as well as increased distribution costs, including tariff charges in North America. Gross margin was 10.2% compared with 9.9% in the prior year. This also includes a sequential increase from 8.4% in the first quarter.

Operating income for the second quarter was $68,000,000 roughly in line with the prior year. The slight increase was primarily driven by higher gross profit, partially offset by lower gain on disposal of property, plant and equipment in the current year. Adjusted operating income was $69,000,000 compared with 65,000,000 year. Other income for the second quarter was a gain of 6,000,000 compared with a gain of 2,000,000 in the prior year. The change was due to equity earnings from unconsolidated companies within the food and nutrition sector.

Net income attributable to Fresh Del Monte for the second quarter was $57,000,000 compared with $54,000,000 in the prior year, and adjusted FTP net income was $59,000,000 compared with $51,000,000 last year. Our diluted earnings per share for the second quarter was $1.18 compared with $1.12 in the prior year, and adjusted diluted earnings per share was $1.23 compared with $1.6 in the prior year. Adjusted EBITDA for the second quarter was $95,000,000 up from $89,000,000 in the prior year. Both quarters reflected an 8% margin as a percentage of net sales. Let’s now take a closer look at the financial performance for the second quarter across our business segments, beginning with our fresh and value added product segment.

Net sales for the second quarter were $723,000,000 compared with $694,000,000 last year, an increase of 4%. The increase was primarily driven by higher per unit selling prices in our pineapple product line as well as higher sales volume and per unit selling prices in our fresh cut fruit product line, both supported by continued strong market demand. Additional contributions came from the favorable impact of fluctuations in exchange rates as well as tariff related price adjustments in North America. The gains were partially offset by lower net sales in our fresh cut vegetable and vegetable product lines, reflecting strategic operational reductions implemented in the 2024, which included the sale of certain assets of Freshly Farms. Gross profit was 85,000,000 compared with 78,000,000 in the prior year.

The increase was driven by higher net sales, partially offset by higher per unit production and procurement costs as well as increased distribution costs, including the impact of tariffs in North America. Gross margin was 11.7% in the second quarter compared with 11.2% in the prior year. This also includes a sequential improvement from 10.1% in the first quarter of this year. We are continuing to build on this momentum as we work toward our goal of sustaining double digit gross margins in the low teens for this segment, supported by ongoing improvements in product mix, including growth in our premium pineapple varieties, such as Honey Blow and Jet Fresh. Moving on to banana segments.

Net sales for the second quarter were 410,000,000 compared with 394,000,000 in the prior year, an increase of four percent. The increase was primarily driven by higher per unit selling prices across each of our regions combined with favorable impact of fluctuations in exchange rates along with tariff related price adjustments in North America. We also saw higher sales volume in The Middle East as last year was impacted by shipment disruptions related to the Red Sea conflict. The increase was partially offset by lower sales volume in Asia, where an oversupply of local seasonal fruit weakened demand and persistent crop disease reduced available supply. In North America, sales volume was also impacted by crop disease, specifically the continued spread of black cigatoca, which has intensified by adverse weather conditions in our growing regions.

Gross profit was 30,000,000 in line with the prior year. The benefit of higher net sales was mostly offset by higher per unit production and procurement costs resulting from the adverse weather conditions already mentioned along with higher distribution costs, including the impact of tariff related charges in North America and ongoing industry wide port congestion and logistical disruptions across our Central American ports. Gross margin was 7.3% in the 2025 compared with 7.6 in the prior year. Lastly, our other products and service segment. Net sales for the second quarter were 50,000,000 compared with 51,000,000 in the prior year.

The slight decrease was primarily due to lower per unit selling prices in our poultry and meats business. Gross profit was $5,000,000 compared with $6,000,000 in the prior year as a result of the lower net sales. Gross margin was 10.4% in the second quarter compared with 10.7% last year. Now moving to selected financial results. Our income tax provision for the second quarter was $14,000,000 compared with $12,000,000 in the prior year.

The increase was primarily due to increased earnings in certain higher tax jurisdictions. Our effective tax rate for the second quarter was 20%. Net cash provided by operating activities for the six months was a 159,000,000 compared with a 144,000,000 in the prior year. The increase was primarily due to higher net income and working capital fluctuations, mainly driven by higher levels of accounts payable and accrued expenses, partially offset by higher levels of inventory when compared to the prior year. We ended the second quarter with $2.00 $1,000,000 of long term debt, an 84% or 29% reduction compared with the prior year and an 18% reduction compared with fiscal year end 2024.

Our adjusted leverage ratio remains at less than one times EBITDA. Our CapEx investment for the first six months was 22,000,000 compared with 21,000,000 in the prior year. As announced in our press release, we declared a quarterly cash dividend of 30¢ per share payable on September 2025 to shareholders of record on 08/13/2025. On an annualized basis, this equates to a dollar 20 per share, representing a dividend yield of 3.3% based on our current share price. With that, let’s turn to our full year outlook and strategic priorities.

As we look ahead, we continue to expect full year 2025 to be broadly in line with the outlook we shared during our first quarter call. Our outlook reflects our expectation for stable demand across our core products, owing ongoing operational efficiencies, and disciplined execution on our strategic initiatives. As part of the act of that execution, we’re currently transitioning from legacy break box shipping vessels to container vessels in the Asia Pacific region, and we plan to sell two older vessels later this year. This shift enhances operational efficiency and better aligns with our evolving logistic needs. As I mentioned earlier, historically, the second quarter has been one of our strongest, and this year was no exception.

We are confident about our full year trajectory, while we remain mindful of evolving external factors beyond our control. We believe our underlying business fundamentals are strong, and we are confident in our ability to deliver on our full year 2025 objectives. We reiterate our expectation for the for the full year as follows. We expect to see net sales growth 2% year over year. And as far as gross margins by business segment in our fresh and value added product segments, gross margin is expected to be in the range of 10% to 11%.

In our banana segment, gross margin is expected to be in the lower end of historical range of five to 7%. For our other products and services segment, gross margin is expected to be in the range of 12 to 14%. Our selling, general, and administrative expense is expected to be in the range of $2.00 $5,000,000 to $210,000,000 As it relates to CapEx, we now expect our full year spend to be in the range of 70,000,000 to 80,000,000 down from 80,000,000 to $90,000,000 previously communicated. This revision reflects updated project execution timelines. We remain committed to funding initiatives that drive long term value.

We expect non cash provided by operating activities to be in the range of a 180 to a 190,000,000. In closing, the second quarter delivered solid net sales and net income, consistent with our expectations and relative and reflective of the seasonal strength we typically see this time of year. As we enter the second half, we’re mindful of typical third quarter dynamics, including increased availability of seasonal fruit and softer demand during the summer months. We remain focused on executing our strategy, delivering value, and positioning Fresh Del Monte for long term success. This concludes our financial review.

We can now turn the call over to Q and A. Desiree?

Desiree, Conference Call Operator, Fresh Del Monte Produce: We will now begin the question and answer session. And we have a question comes from the line of Michel Pinheiro with Sturtevant and Company. Your line is open.

Michel Pinheiro, Analyst, Sturtevant and Company: Good morning.

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: Good morning, Good morning, Mitch.

Michel Pinheiro, Analyst, Sturtevant and Company: So I did I want to start. I have a bunch of questions. First on the pineapple business. So pineapple supply has struggled a little bit here, I guess, related. But I was wondering, Mohammed, if you could give us an update on where you think and how we saw a lot of new pineapple growth and was wondering how you expect that to play out over the next six months and then what supply looks like for your pineapples you know, into 2026.

So we’re gonna see an increase that fast or are we not there yet in the cycle?

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: We expect that continuing, you know, to the end of this year and going into next year, there will be in my in our opinion, there will be a shortage of supply, more or less like this year or a little bit even more than than so we expect very very from our part, on our side, I I can’t speak for the industry, but as as Fresh Del Monte, we see a very strong pineapple market going forward, you know, especially with our premium varieties that is is unparalleled in the market. And our expertise and our, you know, seeds are definitely better than anything in the market. So I believe that in in our case, I don’t see any change to what is going on right now, the dynamics in the market through ’26. In addition to that, you know, and and and I would say about couple of years, two, three years, we will be starting our production in Brazil, which I think we haven’t, you know, announced that. But that will be another new area of of production sourcing, and that would be mainly for the Brazilian market in particular.

Michel Pinheiro, Analyst, Sturtevant and Company: So once you get through 2026, I guess, like what type of growth rate would you expect to see in your own businesses supply? Like are we talking, new plannings and things like that with mid single digit? I mean, are you is it stronger?

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: I would I would say in in in Costa Rica, we will have expansion. As we speak, we are expanding in our production areas that has not been planted before already under plantation, you know, plantation. And as I said, we are expanding also in other parts of the the world in in Africa and and Brazil as well as in The Philippines. So we are having and, I mean, not concentrated in one location, but really really across the world. But we will be having over the next two to three years.

I cannot give you figures exactly, but I’m telling you that we are already expanding our production capacity, and we expect there will be and I would say it will not be, you know, 20,000,000 boxes additional, but there will be a meaningful increase in our production in the next two to three years.

Monica Vicente, Senior Vice President and Chief Financial Officer, Fresh Del Monte Produce: And, Mitch, on the on the Costa Rica expansion specifically, a little bit higher than the mid single digits, and you know this is a long term crop. So definitely, ’27, you know, from today compared to ’27, little bit higher than the mid single digits, just Costa Rica.

Michel Pinheiro, Analyst, Sturtevant and Company: Okay. Thank you. And then, regarding Pink Glow, I’m seeing more distribution. What where do you guys stand in terms of like, let’s just talk about The U. S.

Market or North America, your ACV. Does, where is it today? How supply constrained is it? And and what do you see the future as far as distribution growth for the pink glow in the next, say, two years?

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: Actually, were constrained by limited supply, you know, going to the market because up till recently, the the the authorities in Costa Rica were not allowing us to plant more pink pineapple because of the GMO issue and then the contamination, you know, risk. We have been granted, you know, recently to increase our acreage, and that’s what we are going to be doing very soon. So supplies, hopefully, you know, it will take about eighteen months for supplies to start coming in. Additional supplies, I mean. Right.

So I will see I would not say in could be at the ’26, early twenty seven when we see more supplies coming into the market. Where the market is really the the absorption absorption or the reception is there. It’s it’s that we don’t have enough supplies along with the other countries that we are not supplying yet, I mean, outside North America, which is as we said, we just been sending some pink pineapples by by air, you know, to to The Emirates just to give I mean, it’s being sold online as well. You know what mean? It’s not in the in the in the supermarkets.

And just to give you an idea of of it’s about, I would say, about $30.33 dollars a piece that is being sold now online in the average. And everything that we said is prebooked and presold. So we are now trying to get into Saudi Arabia as well and cover other countries in in the region. But as as I said, also supply is is is has been constrained. But we will evaluate which market pays more.

So, you know, we allocate where the money is.

Michel Pinheiro, Analyst, Sturtevant and Company: Yeah. It’s quite an accomplishment to, like I mean, you’re you’re this this pink low just sells out everywhere I go. And when I talk to the produce manager, it’s you know, they they sell everyone they can get and would like more. So it’s a it’s a good situation for you guys. And and and they’re selling it, you know, double digit prices per pineapple, which is, which is incredible.

So, anyway

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: Yeah. But, I mean, in addition to that, you know, Mitch, we we we used to have a lot of residues from the pink pineapple that we could not export as as export quality, and we did we and and we didn’t have the opportunity because we didn’t have the authorization from the Costa Rican, authorities to turn them into juice or into, frozen, let’s say, IQF, product. Thanks god recently for the last two months, we have been granted, you know, to freeze or to use this as as frozen, and we are processing this, and it and this is a great also addition to all of SKUs, you know. Think also going into ice cream and the flu season, you know, through the food service, industrial, I would say, segment.

Michel Pinheiro, Analyst, Sturtevant and Company: Changing the subject, moving to fresh cut fruit. You’re doing very well in fresh cut fruit, obviously. Where specifically is the demand coming from? Is it retail versus foodservice? Is it equal across the board?

Is there any one geography that’s growing particularly strong for you guys? Can you talk a little bit about where that growth in demand is coming from and where you see it going?

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: We see the demand mainly on the retail side. The biggest, you know, increase and and expansion is on the retail side. And and the convenience stores. That’s that’s where we see the biggest advances as well as, you know I mean, we are not talking only North America, but we are having The UK. We are having, you know, the Middle East region as well.

So expansion and growth is actually across across the world. And as we speak, you know, we are looking at different countries, new countries to to initiate also fresh cut operations based on, you know, feasibility and return on capital. But that’s the the way going forward. It’s not only North America, but it’s a global expansion, you know, with our expertise, know how, and the vertical integration, the supply chain, you know, where we have the fruit and the ability to supply each region closer to to to to the markets. You know?

The the the the Fresh Del Monte advantage is that it is in it’s not only in one continent. It’s not only producing Costa Rica. Let’s say, which is the major SKUs in the fresh cut, you know, we we produce it in in in three different four different continents. So we are much closer to the markets logistically rather than just, you know, shipping it all all the way from Costa Rica to, let’s say, to Japan or Costa Rica to Europe. I mean, you know, we have Africa which is closer.

We it’s not edge. We we play with logistics more than than just the sourcing.

Michel Pinheiro, Analyst, Sturtevant and Company: K. And then and, you know, your your margins, you know, continue to to march forward there as you as you leverage your your capacity investments. Is that something I mean, we should where do you see the top end of like

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: You mean on the on the fresh cut?

Michel Pinheiro, Analyst, Sturtevant and Company: Yeah.

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: On the fresh cut, I think the margin would stay more or less in the same region that we see right now. What would be our niche is that we will be introducing, you know, more innovation. I mean, let let’s take guacamole for instance, fresh guacamole. I mean, we started this almost probably a year or less than a year ago, and and we see more than double digit growth month over month, I mean, in that category. And then we are the only one in the market that can produce fresh guacamole to the retail sector.

So that gives you an idea where we are going. And I mean, that’s the type of products that we and type of SKUs that we would like to introduce and not just depend on the traditional, you know, type of, fruit offerings or vegetables.

Michel Pinheiro, Analyst, Sturtevant and Company: Moving to banana, how in your view, the black cigatoca, that how much has that affected the banana supply in Costa Rica or in Central America? Is that is it, is it definitely showing up as as as a drag on supply?

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: Yeah. Well, I mean, Costa Rica alone is down over 20% in in their export volume this year as we speak. And that tells you and and the that’s mainly because of the cicatoga disease as well as other, you know, issues, you know, in the soil and the the the climate and the so I don’t see that this is going away. This is getting worse as a matter of fact as we speak. You know?

I mean, it should be that, you know, that the the the disease get get immunity. You know? I mean, they they the the disease transform itself against the the the the kind of chemical that is being used. And, over time, that chemical doesn’t help anymore efficacy, for treatment. And and and and, unfortunately, you know, in in this, in this, space, there is only one supplier in the world that has this product, and it’s becoming even so costly that, you know, it’s adding more cost to the their banana box because you have to apply more cycles and to do more applications, which cost you more money.

And still, I don’t think that there is an there is a cure, in my opinion, unless something, you know, kind of extraordinary. On our part, we are working on several fronts to find a solution to this Katoga. I cannot disclose at this time, but, we are doing a lot of work now to find solutions for that.

Michel Pinheiro, Analyst, Sturtevant and Company: K. And then, but over time here with the banana supply affected negatively, I guess should be good for prices. You should be able to get I mean, bananas are obviously one of the lowest priced items in grocery channel. There seems to be some headroom for you to raise prices to offset the supply limitations. Would you see it that way?

Or

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: It’s a it’s a it’s a it’s it’s actually not our I mean, it’s it’s an industry. It’s a it’s it’s a supplier’s issue. I mean, it’s not our issue that still, you know I mean, we are very much you know, we we even have lowered our volumes over the last two years in order to maintain profitability and and make sense of of this business. But the problem is not with the with the with the I I believe the problem is with the with the existing suppliers that they don’t understand that going forward, they cannot survive with the such pricing, you know, in the market.

Michel Pinheiro, Analyst, Sturtevant and Company: K. Just a couple other quick questions. It was interesting you’re selling two of your older vessels as you switch over to sort of the legacy to the container ships. Are you going to would you consider buying two new ones like you have adding to the fleet? Or are you happy with your current setup and will sort of lease vessels or however, you know, for for your capacity?

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: No. But, what Monica mentioned actually is only for Asia. These two vessels were were, you know, were servicing Japan and Korea markets, and that’s what we are replacing. We are selling off these ships and and using container, shipping line now Okay. To to replace it.

As far as North America, everything is also on the table. You know? I mean, we are we will do whatever is the best interest of the of the company, definitely.

Michel Pinheiro, Analyst, Sturtevant and Company: Okay. And and, I mean, are you pleased I mean, are you happy with the way you’ve your purchase of those six vessels? Is that working out as expected? It seems to be, but

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: I mean, you can see our cash generation. I think that speaks for itself, Pitch. You look at our cash.

Michel Pinheiro, Analyst, Sturtevant and Company: Understood.

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: I think.

Michel Pinheiro, Analyst, Sturtevant and Company: And then a couple other things. You had a $6,000,000, you know, equity earnings from unconsolidated companies. Which which companies are generating that type of profit for you?

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: Well, actually, we have invested in in several funds that are friendly funds that we have been very close with. And these are companies that are in the Food industry? Food industry, let’s say. And I think we have made the right choices and we made the right investments. And I think that this is just a a beginning.

I think these are very successful extremely successful companies that are already growing, you know, double digit as we speak. So we are very, very very pleased with with what we, you know, invested.

Michel Pinheiro, Analyst, Sturtevant and Company: Okay. And then last question was just, what was the, I didn’t see the queue yet, but, the foreign exchange impact on revenue and gross profit, was there any can you give us those amounts that you met

Monica Vicente, Senior Vice President and Chief Financial Officer, Fresh Del Monte Produce: Yeah. The euro, has been getting stronger, which helped us. We do have part of our sales hedge at a little bit lower rate, but it definitely helped. The British pound also was stronger, and the Japanese yen was stronger than last year even though it’s it’s kinda weakened a little bit now. But, definitely, those three currencies helped our our net sales.

But the local the local selling prices in these markets were also very strong. So it it it was both both scenarios.

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: But but to add to what Monica said, that you have to think there is a tailwind on one side and we have headwinds on the other side. I mean, Costa Rica by itself is is very, difficult situation. You know? I mean, we used to have a colon, you know, exchange rate to the dollar years ago for 600. 610, 620.

And today, we are barely at around 500, 500, $6,505, which you can say, and increase, of course, inflation over the last two, three years, continuous inflation, continuous increasing cost. And then the exchange rate is getting stronger, and that’s huge headwind, headwinds for us. I mean, added a lot of cost on our production, be it on the pineapple, melon, or bananas, or whatever we we do there. So, really, you know, when you look at the, the tailwind, which is the euro and the that but you also have to look at the headwind, and then one offsets against each other. I wish the the the cologne would have been, you know, normal as as it used to be, then it would have been even much better picture than what we see today.

Michel Pinheiro, Analyst, Sturtevant and Company: All right. Well, that’s all I have. Thank you.

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: My pleasure. Thank you.

Desiree, Conference Call Operator, Fresh Del Monte Produce: There are no further questions at this time. I would like to turn the call back over to Mr. Mohammad Abu Ghazaleh for closing remarks.

Mohammad Abu Ghazali, Chairman and Chief Executive Officer, Fresh Del Monte Produce: Thank you, D. J. And I would like to thank everyone for joining us on this call today and hope to talk to you on our next quarter with equally good news. Thank you and have a good day.

Desiree, Conference Call Operator, Fresh Del Monte Produce: Ladies and gentlemen, that concludes today’s call. Thank you all for joining and you may now disconnect.

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