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FRESH DEL MONTE PRODUCE INC (FDP)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid execution: net sales rose 4% to $1.1825B, gross profit increased 6% to $120.1M, and gross margin expanded 30 bps to 10.2%, driven by proprietary pineapple varieties and fresh-cut fruit momentum .
  • Adjusted diluted EPS of $1.23 beat S&P Global consensus of $0.95, and revenue of $1.1825B exceeded consensus of $1.1575B; GAAP diluted EPS was $1.18 (consensus figures marked with asterisks and sourced from S&P Global)* .
  • Segment trends: Fresh & Value-Added net sales up 4% with gross margin at 11.7%; Banana net sales up 4% with margin at 7.3% given weather and disease pressures; Other Products & Services saw modest margin compression .
  • Balance sheet and capital allocation remained disciplined: long-term debt reduced to $201M; quarterly dividend declared at $0.30; no buybacks in Q2 (remaining authorization $142.4M) .
  • FY25 outlook reiterated, with CapEx lowered to $70–$80M (from $80–$90M) and operating cash flow guided to $180–$190M; containerization shift in Asia and strong premium pineapple demand are near-term catalysts .

What Went Well and What Went Wrong

What Went Well

  • Premium pineapple demand and proprietary varieties drove pricing and margins: “Sales growth was fueled by continued demand for our core products, including our proprietary pineapple varieties” .
  • Fresh-cut fruit momentum and geographic expansion: strong market demand, margin improvement, and plans for global fresh-cut facility expansion supporting low-teens gross margins in segment over time .
  • Operating discipline and capital structure: debt reduced to $201M; adjusted EBITDA margin improved YoY to 8.1%; dividend maintained at $0.30 .

What Went Wrong

  • Banana margins compressed (7.3% vs. 7.6% PY) due to adverse weather, disease (Black Sigatoka), and higher distribution/tariff-related costs; volume softness in Asia and North America .
  • Tariff-related charges and port congestion increased distribution costs; Caldera port swells created 3–5 day delays and broader logistics impacts .
  • FX and local inflationary pressures (Costa Rican colón strength) offset euro/GBP tailwinds, raising production costs in key sourcing regions .

Financial Results

Consolidated KPIs (GAAP and Adjusted)

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Billions)$1.013 $1.098 $1.183
Gross Profit ($USD Millions)$68.7 $92.2 $120.1
Gross Margin (%)6.8% 8.4% 10.2%
Operating Income ($USD Millions)$30.3 $44.9 $68.3
Net Income ($USD Millions)$20.4 $31.1 $56.8
Net Income Margin (%)2.0% 2.8% 4.8%
Diluted EPS (GAAP) ($)$0.42 $0.64 $1.18
Adjusted Diluted EPS ($)$0.26 $0.63 $1.23
EBITDA ($USD Millions)$48.4 $62.1 $94.9
Adjusted EBITDA ($USD Millions)$35.2 $61.3 $95.4
EBITDA Margin (%)4.8% 5.7% 8.0%
Adjusted EBITDA Margin (%)3.5% 5.6% 8.1%

Actual vs S&P Global Consensus – Q2 2025

MetricConsensusActual
Revenue ($USD Billions)$1.158*$1.183
Primary EPS ($)$0.95*$1.23 (Adjusted)

Values with asterisks retrieved from S&P Global.

Segment Performance (Net Sales and Gross Margin)

SegmentQ2 2024Q1 2025Q2 2025
Fresh & Value-Added Net Sales ($USD Millions)$694.1 $683.2 $722.6
Fresh & Value-Added Gross Margin (%)11.2% 10.1% 11.7%
Banana Net Sales ($USD Millions)$394.3 $363.8 $410.0
Banana Gross Margin (%)7.6% 4.6% 7.3%
Other Products & Services Net Sales ($USD Millions)$51.3 $51.4 $49.9
Other Products & Services Gross Margin (%)10.7% 11.9% 10.4%

Additional KPIs

MetricQ4 2024Q1 2025Q2 2025
Dividend Declared per Share ($)$0.25 $0.30 $0.30
Long-Term Debt ($USD Millions)$244.1 $233.0 $201.0
Share Repurchase ($USD Millions)$0 $7.6 $0
Remaining Buyback Authorization ($USD Millions)$150.0 $142.4 $142.4
Cash from Operations ($USD Millions)N/A$46.1 $113.1*

Value with asterisk retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales Growth YoYFY 2025~2% ~2% Maintained
Fresh & Value-Added Gross MarginFY 202510%–11% 10%–11% Maintained
Banana Gross MarginFY 20255%–7% Lower end of 5%–7% Slightly Lower
Other Products & Services Gross MarginFY 202512%–14% 12%–14% Maintained
SG&A ($USD Millions)FY 2025$205–$210 $205–$210 Maintained
CapEx ($USD Millions)FY 2025$80–$90 $70–$80 Lowered
Net Cash from Operations ($USD Millions)FY 2025$190–$200 $180–$190 Lowered
Logistics Strategy (Asia)FY 2025Legacy breakbulk Shift to containerized; sell 2 vessels Strategic Shift

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Premium Pineapple PortfolioStrong demand; pricing strength; expansion plans Demand outpaces supply; continued pricing strength; Pinkglow distribution expanding Strengthening
Fresh-Cut Expansion & MarginsFresh-cut as profit center; automation; club expansion Sequential margin improvement; targeting low-teens gross margins in segment Improving
Banana Supply & Disease ChallengesWeather impacts; sourcing diversification (Somalia project) Black Sigatoka pressures; TR4 gene-edited trials to begin; margin at 7.3% Persistent Headwinds
Logistics & Port ConditionsTariff risk flagged; legacy breakbulk noted Severe swells at Caldera; 3–5 day delays; transition to containerized shipping in Asia Mitigating via Strategy
FX & Cost EnvironmentFX headwinds (CRC), mixed impacts Euro/GBP/JPY tailwinds offset by CRC strength/inflation in Costa Rica Mixed, Net Balanced

Management Commentary

  • “Sales growth was fueled by continued demand for our core products, including our proprietary pineapple varieties, and strong momentum across our fresh-cut business… These results affirm the power of focus and execution” — Mohammad Abu-Ghazaleh, CEO .
  • “We are continuing to build on this momentum as we work toward our goal of sustaining double-digit gross margins in the low teens for this segment” — Monica Vicente, CFO (Fresh & Value-Added) .
  • “There is a global shortage in banana production… we are pleased to report that field testing of TR4-resistant gene-edited banana lines is expected to begin in the coming months” — CEO .
  • “We plan to sell two older vessels later this year” and shift to containerized shipping in Asia to enhance efficiency — CFO ; confirmed via CMA CGM partnership .

Q&A Highlights

  • Pineapple supply/demand: Management expects continued supply tightness into 2026; expansion underway in Costa Rica, Africa, Brazil, and the Philippines; Costa Rica growth “a little bit higher than mid-single digits” through 2027 .
  • Pinkglow ramp: Regulatory approvals to expand acreage in Costa Rica; 18-month timeline for added supply; early Middle East entry shows strong pricing and sell-through (e.g., ~$30–$33 per fruit in UAE online) .
  • Banana disease and pricing: Black Sigatoka materially impacting supply; costs rising; management notes industry pricing dynamics need to reflect reality to sustain suppliers .
  • Logistics assets: Two Asia-serving vessels to be sold; container lines replacing breakbulk; North America logistics remains flexible .
  • Equity earnings and FX: ~$6M equity income from unconsolidated food/nutrition investments; euro/GBP/JPY strength aided net sales while CRC strength was a headwind on production costs .

Estimates Context

  • Q2 2025 beat vs consensus: Adjusted EPS $1.23 vs $0.95*; revenue $1.1825B vs $1.1575B*. Management’s gross margin and segment commentary aligns with a positive revision bias to fresh-cut and premium pineapple expectations .
  • Prior quarter context: Q1 2025 adjusted EPS $0.63 vs consensus $0.615*; revenue $1.098B vs $1.118B* (slight revenue miss amid banana/FX headwinds)* .

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Mix-led inflection: Proprietary pineapple and fresh-cut fruit momentum continue to drive gross margin expansion toward low-teens targets in Fresh & Value-Added; this underpins earnings trajectory into H2 .
  • Banana risk managed, not eliminated: Weather/disease (Black Sigatoka/TR4) remain structural headwinds; R&D (TR4-resistant lines) and sourcing diversification (Somalia, Brazil) are medium-term mitigants .
  • Logistics modernization: Asia containerization and vessel sales should improve cold-chain quality and reduce handling-related losses; expect incremental efficiency and customer satisfaction benefits .
  • Capital discipline: Debt reduced to $201M and dividend sustained at $0.30; buyback capacity ($142.4M) provides optionality if valuation dislocation occurs .
  • Guidance largely intact with prudent tweaks: CapEx trimmed to $70–$80M and operating cash flow now $180–$190M; SG&A maintained; fresh-cut margin goals reiterated .
  • Near-term trading setup: Positive Q2 beat on EPS/revenue and visible margin drivers in fresh-cut/pineapple could support estimate revisions; monitor banana disease/logistics to gauge sustainability .
  • Medium-term thesis: Brand/moat in premium tropicals plus value-added innovation (e.g., fresh guacamole) and biomass initiatives create durable mix shift; execution on global sourcing and containerization is key .