Fresh Del Monte Produce, Inc. F1Q10 Earnings Call Transcript

Fresh Del Monte Produce, Inc. F1Q10 Earnings Call Transcript
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Fresh Del Monte Produce, Inc. (FDP)

F1Q10 Earnings Call

May 4, 2010 11:00 am ET

Executives

Christine Cannella - Assistant VP, IR

Mohammad Abu-Ghazaleh - Chairman & CEO

Richard Contreras - SVP & CFO

Analysts

Brett Hundley - BB&T Capital Markets

Scott Mushkin - Jefferies & Company

Bill Chappell - SunTrust

Jonathan Feeney - Janney Montgomery Scott

Eric Larson - Soleil Securities

Diane Geissler - CLSA

Ed Roesch - Cantor Fitzgerald

Vincent Andrews - Morgan Stanley

Presentation

Operator

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Good day, ladies and gentlemen and welcome to the Fresh Del Monte first quarter 2010 conference call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference call, Christine Cannella for the opening remarks.

Christine Cannella

Thank you, [Kenly]. Good morning everyone and welcome to Fresh Del Monte's first quarter 2010 conference call. I'm Christine Cannella, Assistant Vice President of Investor Relations. Joining me today are Chairman and Chief Executive Officer, Mohammad Abu-Ghazaleh; and Senior Vice President and Chief Financial Officer, Richard Contreras, who will discuss our results for the first quarter.

Fresh Del Monte issued a press release this morning via Business Wire, e-mail and FirstCall. You may visit our website at www.freshdelmonte.com to register for future distribution. This conference call is being webcast on our website, and it will be available for replay approximately two hours after conclusion of this call.

Our press release includes reconciliations of any non-GAAP financial measures we mention today to their corresponding GAAP measures. The press release maybe found again on our website. This morning, Mohammad will review our operating performance during the quarter, along with recent developments and future outlook. Richard will then review our financial performance for the first quarter of 2010.

Please let me remind you that much of the information that we will discuss this morning, including the answers that we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters. These forward-looking statements are intended to fall within the Safe Harbor provision of the Securities laws.

Our actual results may differ materially from those in the forward-looking statements as a result of various factors, including those described under the heading “Description of Business Risk Factors” in our Form 10-K for the year ended January 1, 2010. This call is the property of Fresh Del Monte Produce. Redistribution, retransmission or rebroadcast of this call in any form without our written consent is strictly prohibited.

With that, I'd like to turn this call over to Mohammad Abu-Ghazaleh. Mohammad.

Mohammad Abu-Ghazaleh

Thank you, Christine. Good morning everyone and thank you for joining us for today’s earnings call. The first quarter of 2010 was a good quarter and a solid start for the year for our company. We delivered higher results on both the top and bottom line compared with the first quarter of 2009. Our other fresh produce and prepared food businesses drove of the quarter’s performance with higher sales and profit growth. We are pleased of our excellent performance despite a number of operating challenges and continued weak economy.

During the quarter, we achieved higher sales in our banana business segment, propelled by higher sales volume and steady demand in North America and the Middle East. However, banana profitability was negatively impacted by significantly lower banana pricing in European markets. Additionally, our banana sourcing areas in the Philippines were impacted during the quarter by a drought, which resulted in lower volume for our Asian markets.

Our competitive positions gold pineapples remained strong during the quarter with higher sales in all regions. Recently the USDA published a report forecasting global per capita consumption of fresh pineapple to continue to increase. Fresh Del Monte remains well positioned as a global leader to capitalize on this growth trend. Our fresh-cut product line turned in another excellent quarter with higher sales volume.

Our North America business remains strong as consumer demand for Del Monte branded fresh-cut products continuous to grow even in a difficult economy. Our melon product line results improved significantly during the quarter compared to the prior year period with pricing gains coupled with lower industry wide volume. We also began introducing new varieties to our growing areas, further diversifying our global melon business.

We also experienced higher sales and pricing in our deciduous product line due to an excellent Chilean growing season. We achieved higher pricing and premium quality fruit for entire season. In spite of the earthquake, our operations continued normally with the very short interruption. We are starting to see a turnaround in our prepared food business segment. While not yet, what I would like it to be the sales and margins performance during the first quarter demonstrates the progress we have made in this highly competitive business.

Looking forward about our prepared food marketing campaigns that we plan to launch later in the year, which will support a variety of new health food products being introduced in the second half of 2010. We continued our global expansion initiatives in emerging markets during the quarter with the opening of distribution center in Jeddah, Saudi Arabia. Jeddah is our 45 largest global distribution center.

In summary, I'm very encouraged by what we have accomplished in the first quarter of 2010. Given the challenges we faced from a weak global economy as a result of our diversification strategy, we were able to minimize our risk exposure to any one product or region and delivered a very solid start to the year. We look to continue to increase our global customer base and expand our region into emerging markets going forward.

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