FRESH DEL MONTE PRODUCE INC Management's Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

• Fresh and value-added products – including pineapples, fresh-cut fruits, fresh-cut vegetables (including fresh-cut salads), melons, vegetables, non-tropical fruits (including grapes, apples, citrus, blueberries, strawberries, pears, peaches, plums, nectarines, cherries, and kiwis), other fruits and vegetables, avocados, and prepared foods (including prepared fruits and vegetables, juices, other beverages, and meals and snacks).
In fiscal 2021, if major shutdowns are implemented around the world, we may experience similar delays for some time to come.
See the Operational Results section below and Part I, Item 1A, Risk Factors, for further discussion.
• Vessel operating expenses – including operations, maintenance, depreciation, insurance, fuel (the cost of which is subject to fluctuations in commodity prices) and port charges.
• Costs related to container equipment – including lease charges and, if owned equipment, depreciation charges.
• Third Party Container Shipping Costs – including the cost of using third party shipping in our logistics operations.
In other foreign jurisdictions, the administrative process has been completed, and we filed a complaint with the Judicial Court on March 4, 2020, to appeal the administrative decision.
We will continue to vigorously oppose adjustment and exhaust all administrative and judicial remedies required in both jurisdictions to resolve the issue, which may be a lengthy process.
Net sales in 2021 were also positively impacted by exchange rate fluctuations against the euro, British pound and South Korean won.
Gross profit in 2021 was also positively impacted by fluctuations in exchange rates against the euro, the Costa Rican colon, the British pound and the Korean won, partially offset by a stronger Mexican peso.
Operating Income – Operating income in 2021 increased by $34.5 million compared to 2020, primarily due to higher gross profit, partially offset by lower net gain on the sale of property, plant and equipment.
Interest Expenses – Interest expense decreased by $1.1 million in 2021 compared to 2020, primarily due to lower interest rates and lower average debt balances.
• Net sales of pineapple increased in all regions, especially in North America and Europe, due to higher volumes and higher unit selling prices.
• Net sales of fresh-cut fruit were driven by higher volumes and higher unit selling prices in most regions, particularly Europe and North America.
• Net sales of vegetables and fresh-cut vegetables decreased primarily in North America, including our MAN Packaging business, due to lower demand in the food service channel and labor shortages.
• Pineapple gross profit increased in all regions due to higher net sales, partially offset by higher production and distribution costs.
• Gross fresh-cut fruit gross profit increased in all regions due to higher net sales, partially offset by higher unit distribution costs.
• Avocado gross profit decreased primarily in North America due to lower volumes and higher unit production and distribution costs.
Gross profit increased by $6.5 million due to higher net sales.Gross profit margin increased from 5.4% to 7.6%.
Capital expenditures related to other products and services segments accounted for $3.8 million or 4% of our 2021 capital expenditures and $0.7 million or less than 1% of our 2020 capital expenditures.During 2021 and 2020, these capital expenditures are primarily related to improving our Jordanian poultry business.
As of December 31, 2021, we had $606.5 million of available borrowings under our committed working capital facility, primarily under our revolving credit facility.
As of December 31, 2021, we applied for $28.4 million in letters of credit and bank guarantees issued by Rabobank, Bank of America and other banks.
(1) We use variable rates on our long-term debt, and for demonstration purposes, we use an assumed average rate of 3.7%.
We have agreements to purchase all or part of our independent growers’ products, mainly from Guatemala, Costa Rica, the Philippines, Ecuador, the United Kingdom and Colombia, that meet our quality standards.Purchasing under these agreements will total $683.2 million in 2021, $744.9 million in 2020 and $691.8 million in 2019.
We believe that the following accounting policies used in the preparation of our consolidated financial statements may involve a high degree of judgment and complexity and could have a material impact on our consolidated financial statements.
Please see Note 20, “Business Segment Data” for a further description of our reportable business segments and segment revenue disclosures.
The table below highlights the sensitivities (USD million) of intangible assets with indefinite durations at risk as of December 31, 2021:
As of December 31, 2021, we were not aware of any items or events that would result in an adjustment to the carrying value of our goodwill and intangible assets of indefinite duration.
• Level 2 – Market-based observable inputs or unobservable inputs substantiated by market data.
For a description of the new applicable accounting announcement, please refer to Note 2 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies” included in Item 8 Financial Statements and Supplementary Data.


Post time: Mar-01-2022