FDP Q2 Deep Dive: Premium Pineapple Demand, Disease Pressures Shape Outlook

Fresh produce company Fresh Del Monte (NYSE:FDP) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 3.8% year on year to $1.18 billion. Its non-GAAP profit of $1.23 per share was 29.5% above analysts’ consensus estimates.

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StockStory’s Take

Fresh Del Monte’s second quarter saw a positive market response, as strong sales in premium pineapple varieties and robust fresh-cut fruit demand offset ongoing supply challenges and higher costs. Management credited the company’s brand leadership in pineapples and operational agility in fresh-cut products for supporting margin stability. CEO Mohammad Abu-Ghazaleh highlighted new international expansion for Pinkglow pineapples and the company’s proactive response to logistical disruptions in Costa Rica. He also emphasized the broader industry impact of rising crop diseases, particularly affecting banana supply.

Looking ahead, Fresh Del Monte expects continued stable demand in its core product lines and will focus on operational efficiencies and product mix improvements. Management signaled planned expansion in pineapple production across multiple regions and the introduction of new value-added products, such as frozen and juice offerings from Pinkglow. CFO Monica Vicente stated, “Our outlook reflects our expectation for stable demand across our core products, ongoing operational efficiencies and disciplined execution on our strategic initiatives,” while warning of external risks like crop disease and logistical headwinds.

Key Insights from Management’s Remarks

Management attributed quarterly gains to premium pineapple growth, global expansion of fresh-cut fruit, and disciplined cost management, while noting persistent disease and logistics challenges.

• Premium pineapple momentum: Strong demand for Honeyglow and Pinkglow pineapples, supported by proprietary offerings and targeted investments, drove category growth. Pinkglow’s expansion into the United Arab Emirates marked its first sustained market entry in the Middle East, indicating international appetite for high-value varieties.
• Fresh-cut business expansion: The fresh-cut segment benefited from consumer preference for convenience and health, with increased sales in both retail and convenience stores across North America, the U.K., and the Middle East. Management noted that vertical integration and diversified sourcing enabled operational agility and proximity to key markets.
• Banana supply challenges: The company faced continued supply constraints in bananas due to climate-driven crop diseases such as Black Sigatoka and Fusarium wilt. These pressures impacted Central American output and created industry-wide shortages. Management is advancing R&D on disease-resistant banana lines, with field testing expected to begin soon.
• Logistics and cost headwinds: Severe ocean swells at the Port of Caldera in Costa Rica caused significant vessel delays and heightened distribution costs. The company responded by reallocating shipments and transitioning from legacy break-bulk to container shipping in Asia, aiming for greater efficiency.
• Value-added product initiatives: Fresh Del Monte is expanding its value-added portfolio, including launching Pinkglow frozen and juice products, and reported strong growth in new offerings like fresh guacamole. These initiatives are designed to build higher-margin revenue streams and respond to evolving consumer trends.

Drivers of Future Performance

Management expects stable demand, efficiency gains, and strategic product mix shifts to drive results, while monitoring disease and logistics risks.

• Pineapple production expansion: The company plans to increase pineapple production capacity in Costa Rica, Brazil, Africa, and the Philippines over the next two to three years. This is expected to support growth in premium varieties, with Brazil focused on local supply starting within a few years.
• Fresh-cut and value-added innovation: Continued investment in fresh-cut operations globally and the rollout of new SKUs, such as frozen Pinkglow and fresh guacamole, are anticipated to sustain double-digit gross margins in the segment. Management sees global retail and convenience demand as key growth drivers.
• Banana disease risks: Ongoing climate and disease pressures, particularly Black Sigatoka and Fusarium wilt, may limit banana supply and create margin volatility. The company’s R&D efforts on disease-resistant bananas and supply diversification are intended to mitigate these headwinds, but management cautions that industry-wide shortages could persist.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will watch (1) the pace of pineapple production expansion and Pinkglow’s supply growth, (2) continued adoption and margin trends in the fresh-cut and value-added product segments, and (3) progress on disease-resistant banana initiatives and their early field results. Execution on shipping transitions and cost containment will also be important for tracking profitability resilience.

Fresh Del Monte Produce currently trades at $37.10, up from $36.07 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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