Calavo Growers See Profit Double on Higher Prices

Avocado handler Calavo Growers Inc. said that higher prices helped double fourth-quarter profit despite slightly slower sales due to an earlier harvest. But a fruit fly quarantine in San Diego County is expected to affect first-quarter sales.

The Santa Ana-based firm, which went from growers cooperative to a public company in the summer, earned $1.2 million, or 10 cents a share, for the fourth quarter ended Oct. 31. That’s double the net income of $608,000, or 6 cents, from the same period a year ago.

For the year, Calavo’s net income rose 82% to $6.9 million, or 60 cents a share, versus $3.8 million, or 37 cents, in the previous fiscal year.

“It looks like we are on track to have another good year,” said Chairman Lee Cole, noting that Calavo has gained market share and lowered its costs by recruiting more grower-suppliers.

The West Coast port disruptions had little effect on the firm’s bottom line, Cole said.

However, he warned that sales in the company’s first quarter would be flat or slightly down because of a Mexican fruit fly quarantine in Valley Center in San Diego County. Growers there supply Calavo with about 15 million to 20 million pounds of avocados a year.

Those avocados, he said, still would be harvested and sold but later next year. To make up for the reduced Southern California avocado crop, Calavo plans to import more Chilean and Mexican avocados, Cole said.

And Calavo plans to sell more of the imports year-round because their low prices make them a big seller both here and abroad.

“One of the things that helped us have a successful year” was sales of Mexican avocados to Japan and Europe, Cole said.

And, he said, he expects greater sales in key supermarket accounts from a new just-in-time delivery program that delivers avocados to stores ripe and ready to eat.

Sales of Calavo’s frozen guacamole, however, were a weak spot during the fourth quarter, declining 9% to $7.4 million. The company is in the midst of adding high-pressure pasteurization equipment in order to sell fresh guacamole.

Shares of Calavo rose 4 cents to $6.79 on Nasdaq on Friday. Earnings were released after the market closed.