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Second quarter of 2018

Camposol's growth, limited by lower sales of avocados

The growth of Camposol, the main Peruvian agro-exporter, in the second quarter of 2018 was limited by the lower sale of avocados, which account for 27% of the company's income. Sales revenue amounted to US $57.9 million, 18% less than in the same period of last year. This was due to a 49% drop in avocado sales, which were impacted by the normalization of their price.

During this period, the volume of avocados sold (-40%) also fell due to a delay in the harvest season. "Our second quarter usually mainly focuses on the avocado campaign, which this year was delayed," said Jorge Ramirez, the CEO of the company. Avocado sales will be channeled towards the third quarter of 2018. "By the end of 2018 we will have a harvested more avocado than in 2017," he added.

The fall in avocado sales was offset by the higher sales of blueberries (+ 287%), which accounts for 38% of Camposol's revenues. This was due to an increase in blueberry prices, which was 24% higher than in the second quarter, and the increase in the hectares planted in the high productivity phase: as 86% had reached this stage in the second quarter, according to the company's last presentation of results.

"Blueberries will become the company's main business line, surpassing the performance of avocados in 2017," said Veronica Amendola, a senior VP analyst at Moody's. The risk rating agency estimates that by the end of this year blueberry sales revenues could reach US $ 167 million, i.e. 40% more than in 2017.

Moody's estimates that in 2019 Camposol's sales volumes will increase by 12% due to the high demand from the US and Europe for healthy products, and the increased demand from China for blueberries and avocados. The company expects to at least double its size in three years after having become the first Peruvian agro-exporter to internationalize its production.

This year Camposol acquired 350 hectares in Colombia to expand its avocado production and 1,000 hectares in Uruguay to expand its mandarin production. In Colombia, the goal is to produce 40,000 MT of avocado by 2025, a volume similar to that produced in Peru in 2017, according to Ramirez. The acquisition of land in Uruguay will allow the company to consolidate its position as the main supplier of seedless mandarins in the southern hemisphere in the medium term, the executive added.

The future growth of Camposol lies in the internationalization of its production -which will allow it to increase its production volume, diversify its regional risk, and expand its commercial window- and the diversification of its portfolio. "We are testing more than fifteen crops," said Ramirez.

Alliance with Alibaba
In addition, the company expects that its commercial office in Shanghai - which was opened in August 2017 - will allow it to better serve the Asian market. In 2015, the National Agrarian Health Service (Senasa) eliminated the phytosanitary barrier for the entry of avocados into China and, in two years, the exports of avocados to this market increased by more than 8,000%. Peruvian agro-exporters have been focusing on increasing their penetration in the Asian market, which has a great demand for superfoods.

"We have managed to establish relationships with the main retailers such as Walmart, Carrefour, Yonghui, Vanguard, and Citishop," Ramirez said. In addition, the company has formed a strategic alliance with Alibaba - the world's largest e-commerce platform - for the sale of blueberries and avocados in the Chinese market, and caters to online platforms such as JD.COM and Fruitday, which together account for more than 80% of China's e-commerce. "We believe that there is great potential in China and we believe that it will play an important role in the global consumption of fruits and protein foods," the executive added.


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