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Edited Transcript of FDP earnings conference call or presentation 21-Feb-17 4:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 Fresh Del Monte Produce Inc Earnings Call

Coral Gables Feb 21, 2017 (Thomson StreetEvents) -- Edited Transcript of Fresh Del Monte Produce Inc earnings conference call or presentation Tuesday, February 21, 2017 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christine Cannella

Fresh Del Monte Produce Inc. - Assistant VP of IR

* Mohammad Abu-Ghazaleh

Fresh Del Monte Produce Inc. - Chairman, CEO

* Richard Contreras

Fresh Del Monte Produce Inc. - SVP, CFO

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Conference Call Participants

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* Mitch Pinheiro

Wunderlich Securities - Analyst

* Jonathan Feeney

Consumer Edge Research LLC - Analyst

* Ajaya Patel

Evaluate Research - Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to Fresh Del Monte Produce fourth-quarter and full year 2016 earnings conference call. (Operator Instructions). As a reminder, this conference call may be recorded.

I would now like to turn the call over to Ms. Christine Cannella, Assistant Vice President Investor Relations. Ma'am, you may begin.

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Christine Cannella, Fresh Del Monte Produce Inc. - Assistant VP of IR [2]

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Thank you, [Takia]. Good morning, everyone, and welcome to Fresh Del Monte's fourth quarter and full year 2016 conference call. Joining me today are Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer; and Richard Contreras, Senior Vice President and Chief Financial Officer.

This call complements our Financial results press release we made public this morning. And you can find that release or register for future distributions by visiting our website at www.freshdelmonte.com and clicking on Investor Relations.

This conference call is being webcast and will be available for replay approximately two hours after the conclusion of this call. Our press release includes reconciliations of any non-GAAP financial measures we mention today to their corresponding GAAP measures.

Before we start, please remember that matters discussed on today's call may include forward-looking statements within the provisions of the Federal Securities Safe Harbor laws. Forward-looking statements involve risks and uncertainties, which are more fully described in today's press release and our SEC filings. These risk factors may cause actual Company results to differ materially.

This call is the property of Fresh Del Monte Produce, redistribution, retransmission, or rebroadcast of this call, in any form, without a written consent is strictly prohibited.

Let me turn this call over to Mohammad. Mohammad.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [3]

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Thank you, Christine. Good morning everyone.

Our solid results in the fourth quarter 2016 capped a year of outstanding financial performance at Fresh Del Monte Produce.

Net income increased $117 million to $246 million and we generated earnings per share of $4.74 up from $2.43 a year ago. We also achieved significant operational goals in 2016 and built momentum across the global business platform, securing our position as the world's leading suppliers of healthful, wholesome and nutritious fresh and prepared foods.

First, we strengthened our dominate market position in the fresh cut arena to meet rising consumer demand by opening new facilities in Europe and Asia with more to follow. Secondly, we expanded our worldwide distribution center network, enabling us to bolster our delivery channel and offer new value-added services to our customers. This expansion allows us to target a wider range of new and existing customers at (inaudible) points.

Third, we added to our portfolio of products and continue to drive up the diversification and innovation through initiatives that included fresh berries and ready to serve prepared meals in response to ever increasing demands from consumers seeking convenient, high quality, ready to eat Del Monte branded produce.

In addition, 2016 we strengthened our company owned berry and deciduous production by acquiring farms in South America. And we made investments in replanting our mature farms and plantations, which would result in increased yields, coast improvement and efficiency. In summary, our successes throughout 2016 clearly shows that the strength and steady execution of our strategic initiatives are contributing to the bottom line.

We have always stressed that investing in Fresh Del Monte is a long stand proposition. Highlighted by our global (inaudible) infrastructure and diversification strategy with these strengths and our expansive experience we remain confident in our ability to drive profitability over the long term.

At this point I would like to turn the call over to Richard. Richard?

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Richard Contreras, Fresh Del Monte Produce Inc. - SVP, CFO [4]

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Thank you, Mohammad.

For the year 2016, excluding adjustments on a comparable basis, we reported earnings per diluted share of $4.74 compared with earnings per diluted share of $2.43 in 2015. Net sales were $4 billion compared with $4.1 billion in the prior year and gross profit increased to $461 million compared to $342 million in 2015.

Operating income for the year was $266 million compared with $158 million in the prior year, and net income was $246 million compared with $129 million in 2015. For the fourth quarter of 2016, excluding adjustments on a comparable basis, we reported earnings per share of $0.26 compared with a net loss per share of $0.10 in 2015. Net sales were $955 million compared with $978 million in the prior year and gross profit increased to $57 million compared with gross profit of $45 million in the fourth quarter of last year.

Operating income for the quarter was $5 million compared with an operating loss of $6 million in the prior year and net income was $14 million compared with a net loss of $6 million in 2015. Now, as I turn to the business segments I will only give fourth quarter statistics as reported. In our banana business segment, net sales decreased $43 million to $431 million compared with $474 million in the fourth quarter of 2015.

The decrease was primarily due to lower industry sales volume in North America and Europe, along with lower selling prices in Europe. Overall volume was 9% lower compared with the prior year. Worldwide pricing was in line with the prior year at $12.94 per box.

Total worldwide banana unit costs decreased 6% due to lower fruit and ocean freight costs and gross profit was $5 million compared with the loss of $25 million in the fourth quarter of 2015. In our other fresh produce business segment for the fourth quarter net sales increase to $441 million compared with $418 million in the prior year and gross profit was $38 million compared with $54 million in the fourth quarter of 2015.

In our gold pineapple category, net sales decreased $9 million or 7% to $124 million during the quarter. The decrease was due to lower sales volume in our Asia and Middle East regions along with lower selling prices in North America and Europe as a result of higher volume from central America. Overall volume increased 6% due to higher yield from our plantation in Costa Rica, partially offset by lower production and decreased yields from the sourcing areas in the Philippines, which were adversely effected by erratic weather throughout the year. Unit pricing was 12% lower and unit cost was 1% lower.

In our fresh cut category net sales increased $9 million or 7% to $131 million during the quarter. The increase was a result of higher sales volume and higher selling prices in both North America and Asia. Overall volume was 5% higher as we continue to further diversity our customer portfolio and geographic presence.

Unit pricing increased 2% and unit cost was 2% lower. In our avocado category, net salaries increased $21 million or 55% to $60 million compared to the prior year. The increase was driven by higher selling cost, the result of increased consumer demand and tight industry supply. Volume decreased 1%, pricing was 57% higher and unit cost was 70% higher as a result of the tight industry supply.

In our non-tropical category, net sales increased to $44 million compared to $37 million in the fourth quarter of last year. The increase in sales was primarily attributable to higher sales volume in our stone fruit product line in Asia and North America. Volume decreased 7%, pricing was 30% higher and unit costs were 33% higher than the prior year.

In our prepared food segment, net sales were $82 million compared to $86 million in the prior year and gross profit was $14 million compared to $15 million in the prior year.

Now going on to costs for the fourth quarter. Banana fruit cost, which includes our own production and procurement from growers, decreased 6% worldwide and represented 32% of the cost of sales. Carton costs decreased 6% and represented 4% of the total cost to sales, bunker fuel costs per ton increased 13% and represented 2% of our total cost of sales, but total ocean freight cost during the fourth quarter, which includes not only the bunker fuel but also third party charters and fleet operating costs, was 10% lower.

For the quarter ocean freight represented 9% of the total cost of sales. As to foreign currency, the foreign currency impact at the sales level at fourth quarter was unfavorable by $10 million and at the gross profit level the impact was unfavorable by $8 million. Other expense net for the quarter was an expense of $5 million compared with other expense net of $3 million in the fourth quarter of 2015, the increase was attributable to foreign exchange losses.

As far as our stock repurchase plan, during the fourth quarter we repurchased approximately 653,000 shares for approximately $39.7 million. Total debt at the end of the quarter was $232 million, income tax was a $14 million benefit during the quarter compared with a $3 million benefit in the prior year. And, as it relates to capital sending, we spent $138 million in 2016 and we expect to spend approximately $160 million in 2017.

That concludes the financial review. We can now turn the call over for Q&A.

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Questions and Answers

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Operator [1]

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Thank you. (Operator Instructions). Our first question comes from Mitch Pinheiro with Wunderlich Securities. Your line is now open.

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Mitch Pinheiro, Wunderlich Securities - Analyst [2]

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Yes. Hi. Good morning everybody.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [3]

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Good morning, Mitch.

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Mitch Pinheiro, Wunderlich Securities - Analyst [4]

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I'd love to get your view on the current banana supply and demand outlook here for the first quarter and maybe as far as you had visibility like maybe the first half of the year?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [5]

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Supply and demand actually started the year soft. Now we're seeing a pick-up in the market in North America, across the world, as a matter of fact. I see supply a little bit short in Asia, the Philippines, but it's not so critical.

And the profits of Central America we have more or less enough supplies. So I see, really, a normal year during the first half of the year in terms of supply and demand, except for the first part of the year. But otherwise I see it as a normal trend, Mitch.

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Mitch Pinheiro, Wunderlich Securities - Analyst [6]

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Okay, thank you. And then, Mohammad, you were sort of, like, crossing your fingers on, you know, the pricing outlook for -- in North America for 2017. Any -- could you give us any color with regard to that?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [7]

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The pricing environment is very competitive, you know, the renewal of contracts, it's not an easy game. Every year -- it's a tough game you know to renew. (Inaudible) because of the competitive landscape.

However, you know, in our case we work very hard to better efficiency, reduce our costs as you can see from 2016. So we are working on this. I mean, the only area where we can improve is by increasing yield and reducing our costs and having a better pack out and that's exactly what we are doing and hopefully we'll always continue to turn out positive results.

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Mitch Pinheiro, Wunderlich Securities - Analyst [8]

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So, as it relates to the cost side, ocean freight costs and overall should probably be a headwind, is that fair?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [9]

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Slight, yes, slight, but not dramatic. But there is definitely some headwind into -- you know, last year was a complete idea situation where bunkers were at the bottom -- every year it an element or item in our business has been on the low side. So you will see some headwind, but so far it's not dramatic.

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Mitch Pinheiro, Wunderlich Securities - Analyst [10]

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And then from -- you know, you've done very well improving your fruit costs. You know, I guess part of that is buying more or, actually, growing more of your bananas, buying fewer from third parties and I guess better yields in your own production.

How does that look so far for the year and does -- will Panama, the new lands you'll start opening in Panama, will that contribute at all in 2017?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [11]

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Not in 2017, no. You will not see this in 2017. Hopefully in 2018 because we're just finishing our contractual arrangements with the Panama government and I believe we'll be starting, hopefully, by mid year, third quarter, planting in Panama.

However, you know, we continuously work to improve our costs and the most important thing is also allocating at what time of the year and that's very important in our business, you know, because usually at the end of the year is the most critical period and that's where we try to minimize the impact of that, which really has our annual or yearly results because of that. So this is an area where we're working very hard to improve and correct.

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Mitch Pinheiro, Wunderlich Securities - Analyst [12]

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Okay. And then just last question and I'll get back in the queue. But regarding Avocados, so obviously there was a tight supply in the fourth quarter and pricing jumps, volumes were flat. But you're really -- your business is really sort of a buy-sell business there in the avocados where you're making, sort of I guess, like sort of a toll charge on the business.

How do you see the first quarter developing in avocados? Has supply, you know and prices sort of normalize? I see prices still being a little high. How do you look at that and any -- does anything carry over from the fourth quarter?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [13]

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No, the fourth quarter is history. But the beginning of the -- I mean, the beginning of the year prices eased a little bit until the Super Bowl, which was a great market in that period. There was a very, very strong market.

However, after -- post Super Bowl we see a very strong tightening in the supply side and we anticipate the prices will start going up again drastically going forward. And there is a shortage, you know, a shortage in Mexico, there is also a (inaudible) in the next crop in California and we see a shortage, as well, from Peru.

So I think there will be very, very -- in my opinion there will be a very strong market for avocado. What is it for the market, I'm not sure because we don't like to be aggressive in the prices because that means less consumption and less appetite by consumers to buy in a bigger way than what they would normally. We will have to wait and see how it will develop.

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Mitch Pinheiro, Wunderlich Securities - Analyst [14]

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Okay. All right. Well, thank you (inaudible).

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [15]

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Sorry, we are in the market anyway, I mean, be it high or low but we are always in the market.

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Mitch Pinheiro, Wunderlich Securities - Analyst [16]

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Yes. Okay. Thank you.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [17]

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Thank you.

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Operator [18]

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Thank you. (Operator Instructions). Our next question comes from Jonathan Feeney with Consumer Edge Research. Your line open.

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Jonathan Feeney, Consumer Edge Research LLC - Analyst [19]

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Good morning. Thank you very much everybody.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [20]

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Good morning, John.

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Jonathan Feeney, Consumer Edge Research LLC - Analyst [21]

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Can you update us on the size of the Middle East business and what's going on there and how big do you think that it will be in 2017?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [22]

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Business in the Middle East is expanding, as a matter of fact we faced, during 2016 was one of our major headwinds was that shortage of bananas from the Philippines. So, last year was about $570 million in total revenue.

If we have the right volumes, because that is always the case is that they are always short in the first half of the year of bananas and even some pineapples, so hopefully -- definitely we are diversifying, you know, we're not just a banana company. We have so many things that is going on right now in the Middle East and diversification. We believe that our business going forward is going to increase at least 7% to 8% per annum in terms of growth.

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Jonathan Feeney, Consumer Edge Research LLC - Analyst [23]

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Thank you. Very helpful. Would you say -- with the great growth you've seen in the fresh cut business, particularly in North America, would you say the categories you compete are growing that fast or are you taking market share from others in the category?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [24]

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Not really. I think that market share has a (inaudible) but to the point where we are growing our business by taking market share, we have introduced -- we are introducing many new items. We have reached new buyer base and we are expanding the business. The business is expanding by itself. People are realizing today that it's more convenient to buy all our fresh cut SKU's, be it on the retail side, food service side, convenience and you name it. And our base is growing really, as a matter of fact, that's why we are expanding our, actually, fresh cut operation across the United States, North America.

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Jonathan Feeney, Consumer Edge Research LLC - Analyst [25]

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Thank you. Would you anticipate that rising fuel costs, bunker fuel I'm thinking of, even with pretty available conditions in ocean freight would become an issue in 2017? (Inaudible) how has that worked out in the past? We've had falling energy prices for a while and now they're starting to bump up. Does that tend to squeeze your business or maybe impose discipline on growers who are less committed to marginal markets than you?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [26]

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I believe, Jonathan, that so far the price of bunker fuel or whatever it is, that we use in our ships or on the road has not gone by very significant amounts. It has increased definitely but not to the point that we saw a few years ago when oil was $140, $150, $130. I don't believe myself -- and I could be wrong -- I don't believe, myself, that we are going to see anywhere close to these prices. I believe that the market will more or less stay where it is today and -- which is acceptable, I mean, for us and our (inaudible).

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Jonathan Feeney, Consumer Edge Research LLC - Analyst [27]

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Thank you. Just one other detail question to follow-up. Can you update us on about where you stand in 2016 on externally sourced bananas versus internally grown bananas total volume?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [28]

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Richard, do we a figure on that?

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Richard Contreras, Fresh Del Monte Produce Inc. - SVP, CFO [29]

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Yes, I do. Bananas -- it's still 60/40. 60 independent.

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Jonathan Feeney, Consumer Edge Research LLC - Analyst [30]

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Got you. Very helpful (inaudible - multiple speakers).

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Richard Contreras, Fresh Del Monte Produce Inc. - SVP, CFO [31]

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(Inaudible) Phillppines skews that a bit but, yes, globally it's 61% actually independent, it's 39% company.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [32]

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But that's going to change as we go forward.

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Jonathan Feeney, Consumer Edge Research LLC - Analyst [33]

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The company is going to go higher.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [34]

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Yes.

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Jonathan Feeney, Consumer Edge Research LLC - Analyst [35]

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Right. Understood. Thank you very much.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [36]

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Very good. Thank you.

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Operator [37]

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Thank you. And our next question comes from Mitch Pinheiro with Wunderlich Securities. Your line is open.

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Mitch Pinheiro, Wunderlich Securities - Analyst [38]

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Yes. Hi. Just a couple of follow-ups here. You know, Mohammad, I was just curious your view, your thoughts on we've seen now [Sumitomo] is buying (inaudible), you know, Chaquita was bought a year and a half ago or so, maybe two years ago. And I'm just curious, I mean, you still look at these low single digit, mid-single digit gross margins in bananas, yet you know, these companies are buying the banana business.

I'm just curious what you think the strategics out there are seeing in bananas? Are they anticipating an increase in consumption, an increase in profitability? Why now -- why have we just seen a continuation of all this -- you know people buying the banana businesses?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [39]

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Honestly it's a very strange question because you have a point. But I think in the case of (inaudible), Sumitomo or Sumi Fruit, because they have their production in the Philippines and what they are trying to do is become an international player. And as we know, (inaudible) only has a present in Europe and doesn't have a presence -- very, very minor in the US or anywhere else.

So the only move -- the reason for them to buy into (inaudible) is trying to make an international presence or for something that could be -- if you like, between brackets, multinational. Which we will wait and see how this will develop. As far as Chaquita when it was (inaudible), they are business people and have help around their business, I wasn't surprised that was a natural kind of progression for them.

Other than that, we don't have too many players in this field. The only way that you will survive in this field if you produce better, if have cheaper costs, if know how to allocate your volumes at the right time of the year and hopefully -- you know, because, as I always say, banana, it's the biggest volume in terms of volume and in terms of revenue but it doesn't mean it is our powerhouse.

It's not our machine that will generate income. As I say always our -- in the pipeline, you know, at Fresh Del Monte we have so many things going on that in the future you will see that shift, you know, that we will continue with the bananas as being our kind of driving force but it's not going to be our profit center that take the company to the new levels.

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Mitch Pinheiro, Wunderlich Securities - Analyst [40]

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Okay, thank you. And then, with regard to -- one thing on fresh cut, are you getting any affixed cost leverage with your new facilities? Do you anticipate it being a drag this year as you fill the volume or do you see leverage in your new facilities?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [41]

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We're actually maxed up as I told you. We are maxed up and we are expanding from our existing facilities where we can. We are already building a new you facility in Houston, Texas.

And we will have the mega project going on the Northeast some time end of this year, next year. So we are expanding our footprint across the US and that will give us even more leverage in delivering -- and not only fresh cut because don't forget we are going now into the prepared meals, fresh meals, protein salads, sandwiches, hummus, all these kinds of things are already being introduced to the market and they haven't yet shown any -- it's more volumes now, but as we expand and grow our business this will be a very significant part as well, of our business, going forward.

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Mitch Pinheiro, Wunderlich Securities - Analyst [42]

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And does -- any contribution from new products in 2017, like blueberries and strawberries or how does that look for this coming year?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [43]

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It will be but it will not be -- in the big picture it will be really marginal but it will be, definitely they will have -- we are building this business. We just started a few months ago, give us a couple of years and then it will be probably a good part of our business.

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Mitch Pinheiro, Wunderlich Securities - Analyst [44]

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Okay. And then just final question, it's just on pineapples. It's a nice margin business for you. It struggled a little bit. It looks like you had a good volume but the pricing declined. Is there --.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [45]

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Pricing declined because of the volume, as a matter of fact. So the only reason for the price decline was because it was -- we had a peak in our production and when that peak comes everybody has that same peak. We are now working on adjusting this, hopefully, coming forward but that doesn't happen over a month or two.

This takes a year or even more to make -- sometimes the markets change, market trends change. You know, this production is not planned month to month. It's usually a year or a year and a half or two years before.

So, when you produce you know that in this month you have so much volume or these weeks because you are expecting the demand to be there. The trend, you know, the market's habits have a little bit change, so we are trying to change these according to the market trends. Whatever happened in that fourth quarter was purely over supply that had affected pricing, it had nothing to do with the market.

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Mitch Pinheiro, Wunderlich Securities - Analyst [46]

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Okay. And then a final question here. In your fresh cut business, how much of the fruit inputs are self-produced versus how much do you have to buy from third parties?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [47]

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Well, in the case of pineapple it's 100% by ourselves. In the case of melons, watermelons 100% by ourselves. And you know, grapes, during the Chilean season it's our grapes.

So it's a mix, you know, the major items are 100% supply, all the other items are sourced from either locally if it's from California produce or we imported, let's say mango we import ourselves from Mexico, Peru, Brazil, whatever the source is. But the majority of our items are sourced internally.

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Mitch Pinheiro, Wunderlich Securities - Analyst [48]

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That's got to give you a real significant price advantage, no?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [49]

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Well, it gives us the leverage not only for the pricing, as a matter of fact, but the supply, you know, the consistency of supply, the quality. We have melons and we have watermelons that are speciality. I mean, these are items that are produced just by Del Monte so that's not only the volume but also the variety and the consistency of the quality of the fruit.

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Mitch Pinheiro, Wunderlich Securities - Analyst [50]

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Okay. Fantastic. Thank you very much. Appreciate the questions.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [51]

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My pleasure.

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Operator [52]

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Thank you and our next question comes from Ajaya Patel from Evaluate Research. Your line is now open.

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Ajaya Patel, Evaluate Research - Analyst [53]

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Hello. Good morning, everyone.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [54]

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Good morning.

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Ajaya Patel, Evaluate Research - Analyst [55]

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Thank you for taking my call. So, I just had one question. So basically you're having a plan that picks up around [$160] million this year. Can you give us some specifics of that as in which segment are you planning to do the CapEx in, you know? Is it mainly in the prepared foods segment or the other fresh food produce segment. And secondly, what kind -- in which areas and geographical location are you mainly going to do that?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [56]

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Are you talking about 2017 or last year?

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Ajaya Patel, Evaluate Research - Analyst [57]

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This year, coming year, 2017.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [58]

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2017. Well, most of our capital expenditures will be mainly in farms and mainly in Central America as well as in the Philippines. Also putting up some plant distribution centers where, as I said earlier, we are building now our distribution center in Houston.

We are building up our avocado packing shed and distribution center in Mexico and we have other projects going on around the world in (inaudible) and Europe as well to the fresh cut operation. So it's a -- it's across the board globally.

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Ajaya Patel, Evaluate Research - Analyst [59]

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Okay, thank you. And my second question is, regarding your debt level. The debt has decreased by around $30 million this year in 2016. Are you planning on reducing the debt going forward or what kind of debt levels can we see? Things are expanding, can we expect you to take on more debt or will you continue to reduce your debt?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [60]

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You know, we have a very strong cash flow, so our debt, more of less, will be in the same region. It depends if we go and buy back more shares in the market. But, historically, our debt has been more or less on the same level. We don't believe in (inaudible)high leverage.

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Ajaya Patel, Evaluate Research - Analyst [61]

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Okay, thank you. The that's my questions. Have a great day.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [62]

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Thank you.

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Operator [63]

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Thank you. I'm showing no further questions at this time. I would like to turn the conference back over to Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer, for closing remarks

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman, CEO [64]

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I would like to thank everyone today for attending our call and I hope that we come back to you soon with some good news. Have a good day. Thank you. Bye.

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Operator [65]

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Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.