Sorry about the short reply earlier. I believe that FDP writes their contracts in EU so that they only have to hedge against a meaningful uptick in the $. If you hear about a currency gain due to $ appreciation it will be mitigated by a loss on the currency hedge they bought. Contracts would be written for a certain amount of banana to be delivered in EU.
CQB may collar because their contracts are in $ or they may want to lock down their profits. Bananas are delivered at a $ price reflecting what it was when they "left port". No risk. Cost though is the price of commissions on BOTH contracts.
Do you have a opinion on the viability of "fresh cut"? I know it is viable in the "fast food" arena, but what happens when the information about nutrition, ect, hits the public? Won't they want to prepare it themselves? I know there is a market, but aren't growth estimates overblown?
Saw your post. Hearing things about costs (like you said) that are making me nervous. Q1 is not what I expect from this company. I too like the fundamentals, but instead of just a hard comparison in 2Q, now 3Q is starting to look problmatic. I love this company, would buy in at 24 today, but have a hard time paying the extra 3% prior to the 9/04 numbers believing that I will be sitting on dead money (save for the dividend) for more than 90 days. I fully expect to be way long before 9/04, but buying here is difficult for me.
Geest continues to see growth in its core business of UK fresh prepared foods with the most recent consumer data for the 12 weeks to 25 May showing market growth, at retail prices, of 7%. In the comparable period, Geest has achieved like-for-like sales growth at manufacturers� selling prices of 6%. The trading performances of the Company�s retail customers are clearly diverging and this is becoming more marked as 2004 progresses, which, in turn, is likely to affect the rate of sales growth for Geest in the second half. As the Company indicated at its recent AGM, trading conditions in UK fresh prepared foods were likely to remain difficult, particularly for certain Geest customers.
I had posted already, a few weeks ago. However, said 1.15 or so then, I think I was higher than a kite but we shall see. I am hearing that costs soared and average sales price dropped for bananas in the quarter. Supposed to make q1 look good for bananas. Find a bucket and puke, thats my outlook for the quarter.
However, I am still bullish on any stock trading in the 20's with zero debt and most likely trading at a forward pe of 10, yielding 3+ % on dividend.
You totally understand my post, except for one thing. FDP does not hedge on the downside with regard to $/EU. They only hedge the UP side. $ translation, yes.
What I am waiting for is swampgator's and prodbuy's earning reports. I think earnings are going to be terrible. I hope to buy in around 23.75 or 24. Expect to hear a acquisition announcement simultaneously. Can't see this breaking $26 prior to two weeks prior to the Sept earnings announcement.
Just playing devils advocate here. But how did bananas get to be a part of the political world? CQB? Caused them a lot of problems. A private company can't take on governments. Bananas are more of a commodity than pines. Let the market forces determine production and supply. I do believe in allowing a transition period for the ACP countries, but not a free ride.
I don't see the tie between Wal-mart and the workers in the fields. Whether to deliver to a cost plus or a fixed price contract is a management decision, it means someone assumes a risk. CQB collars their currency transactions, FDP hedges theirs - that means assuming additional risk because they think the risk/reward is justified.
If margins in pines decrease, won't more land be shifted to banana production? That will squeeze margins. FDP can afford it, can their competitors?
WW, who am I to judge this management.
What I know it that bananas are part of the political world. You have to be in it to understand it. This company needs more lobby force, but it prefers to be registered on the Cayman Islands and running the European operations from a yacht in Monaco. Protecting the Delmonte brand means to be willing to back up your workers and plantations. If you fail so the Wall Marts, Aldi and Lidl will screw you where they can.
The best example is the Cameroon banana sold in Asda/UK 20% cheaper than competition. It can be imported with an extra 25000 ton licenses they obtained through an expensive Fyffes/Weichert deal.
Expans/Poland appears to be difficult as the licenses went to another company.
The times of the big margins on pines are over.
I hope this mgt shows more professionals, when they sign new contracts in Costa Rica. Putting a 'Tariff Only support' clausula can have the opposite effect.
180 eur is equal to $4.0 per box. This is what the Ecuadorian grower gets for its fruit.
There is no way where the Latinos will accept a tariff higher than 75 eur.
Dole made a study with a tariff of 140 eur, but it is partially owner of Companie Fruitiere which has own farms in Cameroon and Ivory Coast.
For FDP, it is not clear, that is why I am fishing to see which volumes they control directly in Cameroon. Today FDP has a bigger stake in Africa, after the Weichert deal, but this expires at the end of 2005.