Fresh Del Monte Produce Inc. said second-quarter profit plunged 60% as a slumping economy hurt sales in Europe and Tropical Storm Agatha cut banana production in Guatemala.

Fresh Del Monte’s profits drop 60% on weak economy, storm damage

Higher banana prices in North America weren’t enough to offset the effects of the broader global economy’s struggles, Mohammad Abu-Ghazaleh, Fresh Del Monte’s chief executive officer, said during a conference call with analysts after the release of quarterly results Aug. 3.

“We continued to be challenged by weakness in the global economy, as consumer spending remains low,” Abu-Ghazaleh said. “Consumer spending in Europe will take time to recover.”

Fresh Del Monte reported banana sales rose 9.4% during the quarter, to $452.1 million, with unit volumes up 14%. But the company’s worldwide banana prices declined 4%, to $14.49 a box.

Bananas account for about 45% of Coral Gables, Fla.-based Fresh Del Monte’s sales.

Fresh Del Monte also said gold pineapple prices declined 7%, though melon and tomato prices rose 2% and 3%, respectively. Sales in other fresh produce rose 0.4% to $447.8 million.

Europe’s woes have stung other large, U.S.-based fruit growers. Last week, Chiquita Brands International Inc. said its Europe operations returned to profit the previous quarter after losing money earlier this year. Still, Cincinnati-based Chiquita cut its full-year income and sales forecasts.

Abu-Ghazaleh, during today’s call, indicated banana market fundamentals are improving, though supplies are expected to exceed demand for the time being.

“The industry in general has more supply than demand,” Abu-Ghazaleh said. “I would see more supply than demand till year-end. I don’t see that changing the next three to four months, unless we have a hurricane.”

Pineapple prices have rebounded “significantly” in recent weeks, he said. “We believe prices will be much stronger than they were during the second quarter.”

Tropical Storm Agatha, which battered Central America in late May, caused flooding that damaged Fresh Del Monte’s banana plantations in Guatemala.

The storm led to the loss of about 4 million boxes of bananas and will reduce Fresh Del Monte’s earnings during the second half of this year by $9 million, company executives said. Fresh Del Monte is replanting the damaged plantations, Abu-Ghazaleh said.

During the quarter ending July 2, Fresh Del Monte’s net income fell to $21.2 million, or 34 cents a share, from $52.9 million, or 82 cents, during the same period a year earlier, the company said in a statement today. Sales rose 2.2% to $1 billion.

Excluding charges related to storm damage and the exit of operations in Brazil and South Africa, Fresh Del Monte earned 85 cents a share, about 12 cents above analysts’ expectations, according to Thomson Reuters I/B/E/S.

Fresh Del Monte shares fell 37 cents, or 1.8%, to $20.70 in late trading Aug. 3. The stock is down 6.3% this year.

(Note on correction: The 10th paragraph has been corrected to accurately reflect the pineapple market.)