Although net sales for Fresh Del Monte Produce Inc. decreased in 2012 compared to 2011, the company saw gross profit and net income increase while posting significant gains with its fresh-cut line, according to year-end financial reports.

Del Monte’s chairman and chief executive officer Mohammad Abu-Ghazaleh credited the company’s expanded distribution channels to club stores, convenience stores, foodservice providers and casual dining outlets for much of the 11% net sales increase for its fresh-cut line in 2012.

Del Monte reports drop in banana sales, increase in fresh-cut“I am pleased to share with you today that we are the largest branded fresh-cut food supplier in the U.S.,” said Abu-Ghazaleh, chairman and chief executive officer, during a conference call with investors and media on Feb. 19.

The company’s report on its banana business was not as upbeat. Del Monte’s net sales of bananas dropped 7% in 2012 compared with 2011. Its worldwide banana pricing dropped about 1% to $14.40 per box and banana volume worldwide was 6% lower than in 2011.

Gross profit from bananas was up, however, with Del Monte reporting $89.7 million in 2012 compared to $88.3 million in banana gross profit in 2011. Pricing rebounded in the fourth quarter with 2012 showing a 2% increase compared to fourth-quarter banana pricing in 2011.

Abu-Ghazaleh said aggressive, competitive pricing on bananas in North America remains a mystery to him.

“No one is going to take anyone’s market share (in North America),” he said, “so it means it’s just a loss of revenue and income for all. I really don’t understand it.”

He said he expects price declines for bananas in North America to continue in 2013.

Del Monte’s other fresh produce segments combined saw net sales decrease 2% for 2012 compared to 2011. However, gross profit was $205.8 million for the non-banana fresh segments in 2012, compared to $177.9 million in 2011.

The company’s year-end report for non-banana fresh produce included:

  • Gold pineapple: Net sales decreased 3% to $512.8 million. Volume decreased 7%. Pricing increased 4%. Unit cost was 2% higher.
  • Fresh-cut: Net sales increased 11% to $390.9 million. Volume increased 1%. Pricing increased 9%. Unit cost was 6% higher.
  • Melon: Net sales decreased 8% to $113.8 million. Volume decreased 23%. Pricing increased 21%. Unit cost was 5% higher.
  • Non-tropical: Net sales were in line with the prior year period. Volume decreased 1%. Pricing and unit cost were in line with the prior year.
  • Tomato: Net sales decreased 31% to $72.7 million. Volume decreased 16%. Pricing decreased 18%. Unit cost was 16% lower.