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HomeFinanceLower avocado prices are leading to more purchases, Mission Produce says, but...

Lower avocado prices are leading to more purchases, Mission Produce says, but less revenue


Shares of Mission Produce Inc. jumped after hours on Thursday after the avocado grower reported fiscal second-quarter results that beat estimates, after lower avocado prices led to more product sold but a drop in dollar-figure sales.

The company reported a net loss of $4.6 million, or 7 cents a share, contrasting with a profit of $2.4 million, or 3 cents a share, in the same quarter last year. Sales fell 20% to $221.1 million, driven lower by falling avocado prices and “robust” Mexican harvest volumes. Mexico is the world’s largest avocado producer.

Adjusted earnings per share came in at 1 cent, compared with 4 cents a year ago.

Analysts polled by FactSet expected an adjusted per-share loss of 1 cent, on revenue of $218.1 million.

Still, sales volumes rose 19%, amid a “more normal pricing environment,” after prices surged last year. Those prices jumped on stronger demand, labor and supply-chain constraints, and a brief suspension of Mexican avocado imports.

“Despite the impact of lower prices on per unit margins in the short term, a more rational pricing environment is advantageous for long-term consumption growth and allows Mission to leverage our global distribution footprint to penetrate new growth markets,” Chief Executive Steve Barnard said in a statement.

Mission Produce shares
AVO,
-0.56%

rose 6.2% after hours on Thursday. Executives said the company began operations at a new distribution center in the U.K.

Management said they expected volumes to be roughly 20% higher in the company’s third quarter, “primarily due to the combination of California’s harvest shifting to the third quarter versus the second quarter last year, a strong Peruvian harvest outlook and a larger off-bloom Mexican harvest.”

Shares of Mission Produce are down 10% over the past 12 months. By comparison, the S&P 500 Index
SPX,
+0.62%

has risen 4.3% over that period.



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