Fresh Del Monte Produce (US:FDP)2025-02-24 21:44Financial Performance - Net sales for fiscal year 2024 were $4,280.2 million, a decrease from $4,320.7 million in 2023, primarily due to lower sales volumes and per unit selling prices of bananas, along with negative exchange rate impacts [216]. - Gross profit for 2024 increased by 2% to $357.9 million from $350.7 million in 2023, driven by higher net sales in the fresh and value-added products segment and lower ocean freight costs [217]. - Operating income increased by $137.8 million in 2024 compared to 2023, driven by lower asset impairment charges and higher gross profit [223]. - Net income attributable to Fresh Del Monte Produce Inc. was $142.2 million in 2024, a substantial recovery from a net loss of $11.4 million in 2023 [327]. - Basic net income per ordinary share increased to $2.97 in 2024, compared to a loss of $0.24 in 2023 [327]. - The company reported comprehensive income of $135.1 million for the fiscal year 2024, compared to a comprehensive loss of $13.2 million in the previous year [337]. Sales and Segment Performance - Net sales for the fresh and value-added products segment were $2,606.9 million in 2024, up from $2,477.8 million in 2023, attributed to higher selling prices and sales volume of avocado and pineapple [226]. - Net sales for the banana segment decreased to $1,475.9 million in 2024 from $1,638.2 million in 2023, primarily due to lower sales volumes in North America and Asia [229]. - Gross profit for the fresh and value-added products segment rose to $243.3 million in 2024 from $167.3 million in 2023, with a gross margin increase to 9.3% from 6.8% [227]. - Gross profit for the banana segment fell to $86.8 million in 2024 from $163.3 million in 2023, with gross margin decreasing to 5.9% from 10.0% [230]. Expenses and Costs - Selling, general and administrative expenses rose by $10.2 million compared to the previous year, mainly due to increased employee benefits and marketing activities in North America and Europe [219]. - Cost of products sold was negatively impacted by approximately $8 million in 2024 due to fluctuations in exchange rates, particularly against the Costa Rican colon [209]. - Advertising and promotional costs for 2024 were $12.7 million, up from $10.5 million in 2023 and $9.3 million in 2022, indicating a year-over-year increase of approximately 15.5% from 2023 to 2024 and 12.1% from 2022 to 2023 [383]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $182.5 million in 2024, an increase of $4.6 million from $177.9 million in 2023 [238]. - Capital expenditures for 2024 were $51.7 million, with $35.5 million allocated to the fresh and value-added products segment, focusing on improvements in pineapple operations [240][242]. - Expected capital expenditures for 2025 are projected to be between $80 million and $90 million, primarily for upgrades in pineapple production and fresh-cut operations in Africa [246]. Assets and Liabilities - Total assets decreased to $3,096.2 million in 2024 from $3,184.1 million in 2023, primarily due to reductions in property, plant, and equipment [325]. - Total liabilities decreased to $1,089.4 million in 2024 from $1,271.4 million in 2023, reflecting a reduction in long-term debt [325]. - Fresh Del Monte's total shareholders' equity increased to $2,006.8 million as of December 27, 2024, up from $1,912.7 million at the end of fiscal year 2023 [337]. Strategic Initiatives - The company completed the sale of certain assets of its Fresh Leaf Farms business for proceeds of $17.6 million in November 2024, as part of a strategy to divest non-core assets [200]. - The company is exploring strategic alternatives for its Mann Packing operation, focusing on increasing operational efficiency and elevating product offerings [200]. - The company plans to expand avocado offerings into additional international markets and continue expanding pineapple offerings [47]. - The company aims to streamline operations and reduce overhead costs to enhance efficiency and expand market reach [48]. Risk Management and Compliance - The company is actively monitoring geopolitical pressures and shipping disruptions, particularly in the Red Sea region, which have created logistical challenges [195]. - The company is assessing the impact of inflationary pressures on raw materials and other costs, which may affect future operating results [48]. - The company is focused on maintaining compliance with applicable laws and regulations to ensure operational integrity [48]. Currency and Interest Rate Exposure - Approximately 32% of net sales in 2024 were denominated in currencies other than the U.S. dollar, exposing the company to significant currency exchange rate risk [279]. - A hypothetical 10% strengthening of the U.S. dollar would have resulted in a decrease in net sales of approximately $137.0 million for the year ended December 27, 2024 [282]. - Total variable rate debt at year-end 2024 was $244.1 million, with a 10% increase in interest rates potentially impacting operations by approximately $1.7 million [284]. Goodwill and Impairment - The company recorded a non-cash goodwill impairment charge of $1.4 million for its vegetable reporting unit due to underperformance and reduced forecasted cash flows [267]. - The company recorded non-cash impairment charges of $109.6 million in Q4 2023, including $88.6 million for customer relationships intangible assets [271]. - As of December 27, 2024, the carrying value of the banana reporting unit's goodwill was $64.2 million, with a fair value exceeding the carrying value by approximately 17.7% [269].