Fresh Del Monte Produce Inc. (NYSE: FDP), ("Fresh Del Monte" or the "Company") today reported financial results for the fourth quarter and the full fiscal year ended December 30, 2022.
Financial highlights for the fourth quarter and full fiscal year 2022:
(1) "FDP net income/loss" as referenced throughout this release is defined as Net income (loss) attributable to Fresh Del Monte Produce Inc.
(2) "Diluted EPS" represents diluted earnings (loss) per share and is calculated as FDP net income/loss divided by diluted weighted average shares.
(3) Non-GAAP financial measure. Reconciliations and other information required by Regulation G can be found below under "Non-GAAP Measures."
“The fourth quarter of 2022 has been our best-performing fourth quarter in recent history, led by strong net sales and strong margins,” said Mohammad Abu-Ghazaleh, Fresh Del Monte’s Chairman and Chief Executive Officer. “Overall we closed out 2022 in a much stronger position than 2021 driven by our commitment to remaining flexible and agile, controlling our costs, leveraging our assets, and optimizing customer relationships. 2022 was a notable year for us as we made progress on several fronts including innovation, sustainability, and strengthening our relationships with customers to work toward profitable incremental sales to expand our product line.”
Net sales for the fourth quarter of 2022 increased $22.7 million, or 2%, compared with the prior-year period. For the full fiscal year, net sales increased $190.3 million, or 4%, compared with the prior-year period. In both periods, the increase in net sales was driven by inflation-justified per unit price increases. The increase was partially offset by lower sales volume, primarily in our banana and fresh and value-added products segments, and the negative impact of fluctuations in exchange rates primarily versus the euro, Japanese yen, British pound, and Korean won compared with the prior-year period. The negative impact of fluctuations in exchange rates was partially mitigated by our foreign currency hedges.
Gross profit for the fourth quarter of 2022 was $81.7 million compared with $39.8 million in the prior-year period. The increase in gross profit was a result of the higher per unit selling prices, across all segments. The increase in selling prices partially offset the continuing inflationary and other cost pressures, which resulted in higher per unit production and distribution costs, including packaging materials, fertilizers, inland and ocean freight, labor and fuel.
For the full fiscal year 2022, gross profit was $340.2 million compared with $303.8 million in the prior-year period. The increase in gross profit was primarily driven by higher gross profit in our other products and services segment as a result of higher net sales of third-party ocean freight services, and the favorable impact of higher per unit sales prices, across all segments.
Partially offsetting the higher gross profit was the negative impact of fluctuations in exchange rates and higher per unit production and distribution cost, including costs of packaging materials, fertilizers, ocean and inland freight, fuel and labor resulting from global supply chain, logistics and inflationary cost pressures.
There were no adjustments to gross profit in 2022. In comparison, Adjusted gross profit(3) for full fiscal year 2021 was $307.3 million. Adjusted gross profit excludes a $3.4 million non-tropical fruit inventory write-off due to inclement weather in Chile and $1.3 million inventory write-off incurred in the Middle East, partially offset by a net insurance recovery of $1.2 million associated with hurricane damage to the Company's Guatemala banana operations in the fourth quarter of 2020.
Operating income for the fourth quarter of 2022 was $31.2 million compared with the operating loss of $9.2 million in the prior-year period. The improvement in operating income was due to an increase of $41.9 million in gross profit, slightly offset by higher selling, general and administrative expenses. Adjusted operating income(3) for the fourth quarter of 2022 was $34.2 million compared with the Adjusted operating loss of $7.1 million in the prior-year period. For the fourth quarter of 2022, Adjusted operating income excludes a $3.3 million asset impairment, primarily due to flooding in our Philippines banana operations and a gain on asset sale of $0.3 million. In the prior-year period, Adjusted operating loss excludes a $4.8 million asset impairment, primarily due to the exit from low-yield banana farms in the Philippines, and a gain on asset sale of $2.7 million.
For the full fiscal year 2022, operating income was $156.3 million compared with $111.0 million in the prior-year period. The increase was primarily driven by higher gross profit, a one-time benefit related to a reduction in a North America environmental reserve and lower selling, general and administrative expenses partially offset by a slight net loss on disposals of property, plant and equipment in 2022 when compared to the net gain in 2021. For the full fiscal year 2022, Adjusted operating income was $149.2 million compared with $111.5 million in the prior-year period. The increase was primarily driven by higher gross profit and lower selling, general and administrative expenses.