By Jim Offner for The Packer
Better days lie ahead for Fresh Del Monte Produce Inc., according to Mohammad Abu-Ghazaleh, the company's chairman and chief executive officer.
Abu-Ghazaleh, speaking on a conference call with analysts Feb. 27, said the Coral Gables, Fla.-based company was coming off one of its worst years ever, but he added that cost-cutting measures and better pricing likely would lead to better times this year.
"I'm sure it will not surprise anyone that I'm not sorry that 2006 is behind us," he said. "The final three quarters were the most challenging period in our history. The first two months of the fourth quarter were more of the same."
Fresh Del Monte said costs linked to restructuring its business and falling sales in certain markets led to a $59.9 million loss for the fourth quarter, down from a $3.5 million loss during the same period a year earlier.
Sales fell 3 percent, to $737.6 million from $757.9 million a year ago, mainly due to restructuring of the company's vegetable product line and underperformance of its prepared foods, Abu-Ghazaleh said.
Lower supplies and prices in Europe also left a negative mark, the company reported.
"We faced higher input costs, a difficult banana market in Europe, and lingering issues in our prepared food business. In response, we closed underperforming operations, eliminated unprofitable products, managed our banana supply in key regions and drove improved performance in our tomato and fresh-cut operations," Abu Ghazaleh said.
For 2006, the company recorded a $145.1 million loss, or $2.51 per share, compared with a profit of $106.6 million, or $1.84 per share, in 2005.
Sales slipped 1 percent, to $3.21 billion, from $3.26 billion in 2005.
But, better times lay ahead, Abu-Ghazaleh said, adding that restructuring efforts already had begun to show signs of impending recovery.
"We began to feel a turnaround in December," he said. "This continues, due to our concerted efforts. We are enthusiastic about a number of positive signals we've seen in the marketplace thus far in 2007."
Fresh Del Monte shares closed at $16.42 Feb. 26 on the New York Stock Exchange. The stock had a 52-week range of $14.40-22.45.