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Poor avocado market puts pressure on Calavo Growers' results

The fourth quarter of the 2018 financial year was not good for Calavo Growers. Prices were under pressure for a large part of the quarter. This was reflected in this international consumer goods and farm products company's results. Despite these disappointing results, the figures look favorable for the book year as a whole.

“We have experienced strong year-on-year growth in our core activities," says CEO Lee E. Cole. A 19% increase in volume was noted in the Fresh segment. In the RFG segment, gross profits rose by 15%, and in Foods, guacamole sales climbed by 20%. With 97%, this division's gross profit almost doubled.

"This, despite the fact that our results were influenced by unique, unforeseen circumstances. These affected us in the fourth quarter. I do not think these situations stand in the way of our company's long-term growth. I remain optimistic about 2019," he says.

Over the three months ending on 31 October, Calavo Growers reported a net loss of $1,3 million. Revenue in that quarter rose to $280 million compared to $277 million in the same quarter in 2017. The gross profit was lower and remained at $22,3 million. In 2017 this was $31,5 million.

Although 53% more avocados were sold, prices were under pressure all over the world for eleven weeks in the fourth quarter. The 2017 fourth quarter was characterized by high prices and lagging supplies. This was in stark contrast to the last year's low prices. That distorted the price comparisons.

Revenue fell to $141,1 million last year. In 2017, this was $146,1 million. Gross profit was $9,9 million or 7% of the turnover in this segment. The previous year gross profits stood at $23,8 million. The company's RFG and Food divisions reported better figures. They also had higher revenues as well as gross profits. Double growth figures were even noted in the Food segment.

The net income over the entire year came to $32,3 million. Gross profit was $113,6 million or 10,4% of the turnover. A year earlier the books were closed with a gross profit of $114,5 million. This equalled 10,6% of the revenue. Operational income stood at $56,5 million compared to $57,9 million the previous year.

Calavo feels positive about the new financial year.  “My optimism is bolstered by the strong starts made in the Fresh and Foods segments. These results will be seen in the first quarter of 2019,” says Cole. He expects continued double-digit growth. This means the Foods division should end the year on around $100 million.


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