Hello everyone. And welcome to the Dole plc First Quarter 2022 Earnings Conference Call and Webcast. Today’s conference is being broadcast live over the internet and is also being recorded for playback purposes.

[Operator instructions] For opening remarks and introductions, I would like to turn the call over to the Head of Investor Relations with Dole plc, James O’Regan..

Thank you, Nadia. Welcome, everybody, and thank you for joining our first quarter 2022 earnings conference call. Joining me on the call today are Rory Byrne, Chief Executive Officer; Johan Linden, Chief Operating Officer; and Frank Davis, Chief Financial Officer.

This conference call is being webcast live on our website and will be available for replay after this call. During this call, we’ll be referring to presentation slides and supplemental remarks, and these are available on the Investor Relations section of the Dole plc website.

Please note, our remarks today will include certain forward-looking statements within the provisions of the Federal Securities Safe Harbor law. These reflect circumstances at the time they are made, and the company expressly disclaims any obligation to update or revise any forward-looking statements.

Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors, including those set forth in our SEC filings and news releases.

Our earnings release, financial reports, and related materials for the first quarter can be found on our website and information regarding these are non-GAAP financial measures may also be found in the Notes section of the release, which also includes a reconciliation to the most comparable measures of adjusted EBITDA, adjusted net income, adjusted earnings per share and net debt.

The details of our statutory Forward-Looking Statements Disclaimer can be found in our SEC filings and the presentation slides which we will be discussing today. With that, I’m pleased to turn to today’s call over to Rory..

Thank you, James. And welcome everybody. And thank you all for joining us today as we discuss our results for the first quarter of 2022. I’m joined today by Johan, who will give you an update on operations and by Frank who will take you through the financial review.

Our 6-K, which was filed with the SEC this morning, contains reported financials for the first quarter for Dole plc. Our earnings press release and investor presentation also reference pro forma comparative financial information.

This pro forma information illustrates Dole plc’s results for the first quarter of 2021 as if the merger IPO and refinancing had occurred on January 1, 2020. This is consistent with the pro forma of financial information presented in the Form F-1 filed of the SEC in connection with the IPO. So turning to Slide 6.

Well, the Group has delivered results in line with plan with the exception of the loss incurred in Fresh Vegetables as a result of the Value Added salads recall, which we discussed and flagged on our full year earnings call back in March.

Revenue, more than doubled on a reported basis to $2.2 billion for the quarter, following the acquisition of the remaining 55% of Dole Food Company in 2021. On a pro forma comparative basis, revenue decline, marginally. However, excluding the 16% reduction in revenues in Fresh Vegetables due to the impact of the Value Added salads recall.

On a like-for-like basis and other divisions revenue actually increased by some 4%. We have implemented price increases in our business in response to the increase to operating costs, driven by inflation and supply chain disruption.

Adjusted EBITDA of $81.5 million was ahead of last year on a reported basis and behind – versus the pro forma comparison. Again, the reduction was predominantly due to the impact of the Value Added salads recall.

Fresh Fruit was also behind last year as anticipated against a very strong comparative, which had the benefit of favorable market conditions arising from tight product supply, following hurricanes Eta and Iota. This reduction in EBITDA was also the primary reason for the reduction on adjusted EPS in the quarter.

Looking at our net leverage, there is a seasonal working capital outflow during the first quarter of the year at the outset of growing seasons. This has been higher this year due to the increased cost of imports due to supply chain disruption leading to higher inventory levels in Fresh Fruit.

This, together with the exceptional one off cash costs of the product recall, has led to an increase in leverage to 3.75 times at the end of the quarter. As I mentioned that the outset, aside from the challenges in Fresh Vegetables, the results are in line with their expectations as outlined in our last market update.

And we are therefore pleased to announce a dividend for the quarter of $0.08 as part of our continuing focus on returning value to shareholders and our belief in the strong fundamentals of our business. Building on this strong foundation, we have plenty of positive operation developments during the quarter.

Our commercial cargo business continues to deliver excellent results benefiting from a strong market for our backhaul services. Our sector in general continues to benefit from its affordability and adherence sustainability credentials, as well as continued tailwinds from the macro trend of health and wellness.

We’ve made further strides and synergies and the integration of legacy total produce and Dole Food Company with the rebrand of operations in Ireland and Denmark.

We launched Dole Exotics and the BE Exotic brand with the focus on the growing, procurement, ripening and marketing of avocados, mangoes, and other exotics, primarily for the European market. And the FDA closed its product recall investigation, and all our salad plants were back up running at normal capacity by the end of the first quarter.

I’ll now pass you over to Johan, who can elaborate further on these in the operational review..

Thanks, Rory. And good morning, everyone. Turning to Slide 8. On our last call, we confirmed that all our Value Added salads plants, following the recall, had returned to normal operating capacity.

While this was a positive step, as we turn to the rest of the year, we now anticipate that the turnaround in vegetables, would take more time than previously expected.

While we have been successful in pushing through significant price increases and have been able to recover most of the volume that we could not service at the start of the year, it is also clear that inflationary pressures remain very high and customers are looking to mitigate their own inflationary pressures.

The financial impact that a vegetable recall is a major driver of our Q1 results compared to the prior year. However, from an adjusted EBITDA perspective, the more significant deviation in Q1 is seen in our Fresh Fruit business. As anticipated, our Fresh Fruit quarterly profit dynamics are different in 2022, compared to 2021.

In Q1 2021, the market benefited from very tight supply of fruit in the high demand season following the hurricanes in Honduras and Guatemala in November of 2020.

Q1, 2022 shows a more normal supply position, while Q2 will continue to show a challenging comparative for the same reason, their comparatives become more favorable in the second half of the year.

Our diversified business have performed well in Q1, in particular, on a constant currency basis, again, demonstrating the importance of our broad earnings base. As another example of the importance of our diversified business strategy, I want to call out the continued excellent results of our commercial cargo business.

This is a business that primarily provides backhaul services using our own vessels after our fruit has been delivered to North American and European ports.

As global logistics have become increasingly challenging over the last 24 months, this business has provided help in upsetting some of the significant increased costs we have incurred in the third-party shipping markets.

Q1 has performed in line with expectations to operating environment has shifted significantly as a result of the ongoing geo political situation and its economic consequences.

Overnight due to supply chain difficulties, what is ordinary a tighter supply window in the banana market at this time of the year, has transitioned to one that was significantly oversupplied, which had an impact on market pricing.

Critical inputs have also shown significant inflation because of the geopolitical situation, including rising fertilizer costs, paper cost and fuel costs.

While the marketplace is challenging, both in the Fresh Fruit segment, but also across other businesses, I am pleased to say that we have been proactive in developing important mitigation actions to protect the business.

We have already made important strides in adjusting our own banana supplies for the year, by working with our suppliers to align supply and demand. We have worked with our customers to increase prices where possible in all fruits and we have also worked with our suppliers securing continuity of supply in packaging and agricultural inputs.

While the short-term presents unusual challenges, we also strongly believe that we are positioned to perform well in difficult environments. Fresh produce continues to benefit from its affordability and sustainability, two aspects that we increasingly see driving consumer behavior.

As a leader in our industry, we remain in an excellent position to capitalize on this. For our vegetable business we see potential consolidation opportunities, as well as strategic opportunities to develop in growth areas, such as organics and controlled-environment agriculture.

For our banana business we expect the current market dynamics to improve the long-term supply-demand balance within the industry. And across our business we see opportunities as one of the largest player in our market to succeed in complicated situation and both with new businesses and make strategic acquisitions.

Finally, I want to touch on our continued activity in developing our synergy plan and integrating our business. At the start of April, we officially launched our new special subdivision, Dole Exotics, with a focus on the growing, procuring, ripening and marketing of avocados, mangos, and other exotics, primarily for the European market.

This is an exciting development that specifically brings together an existing total produce present in the marketplace and complement it with additional sourcing opportunities from within Dole.

Dole Exotics will also have an expanded sales team with additional experience in servicing major customers with tropical products such as pineapples and plantain. Elsewhere in the group, we have also seen growth in our avocado business with new supply agreed out of Mexico as well as our first exports out of Peru and South Africa.

In Q1, we also complemented the rebrand of our Ireland and Danish business creating Dole Ireland and Dole Denmark, a small but important step in enhancing our brand presence in the European market and demonstrating clearly to our customers both our deep sourcing capabilities and strong local presence to meet their needs.

With that, I will hand you over to Frank that will give you the financial review..

Thank you, Johan. As we already mentioned at the outset, our earnings press release and investor presentation reference pro forma comparative financial information. This pro forma information illustrates Dole plc’s results for the first quarter of 2021 as if the merger, IPO, and refinancing had occurred on January 1, 2020.

This is consistent with the pro forma financial information presented in the Form F-1 filed with the SEC in connection with the IPO. If we turn to Slide 10, revenue for the first quarter increased to $2.2 billion from $1.1 billion.

The increase was primarily driven by the impact of revenue from the legacy Dole Food Company following the acquisition by Dole plc, which completed last July.

On a pro forma comparative basis, revenue decreased marginally, primarily due to a decrease in the fresh vegetables due to the impact of the value-added salads product recall and due to a negative foreign currency translation impact in our European businesses. On a like-for-like basis, revenue increased circa 4%.

Adjusted EBITDA for the first quarter increased to $81.5 million on a pro forma comparative basis.

Adjusted EBITDA decreased mainly due to the impact of the value-added salads product recall, a reduction in the fresh fruit versus a strong prior-year comparative and a decrease in diversified fresh produce EMEA due to the negative FX movements on translation.

These pieces were offset in part by an improved performance within diversified fresh produce Americas and rest of world. This result was in line with our expectations for the quarter as set out in our last market update in March.

Turning to Slide 11, adjusted net income for the first quarter was $28.2 million, compared to $25.9 million in the prior year and $58.8 million on a pro forma comparative basis. The decrease on a pro forma comparative basis was predominantly due to the decrease in adjusted EBITDA.

Adjusted fully diluted EPS for the quarter was $0.30, compared to $0.46 in the prior year and $0.62 on a pro forma comparative basis with the reductions again due to lower adjusted EBITDA. Looking at each of the segments in more detail and starting with fresh fruit in Slide 13.

The segment reported an increase in revenue against the prior-year pro forma comparative. The increase was driven by a higher pricing for bananas and pineapples in North America and Europe and higher revenue and continued strong performance from our commercial cargo business.

This was offset by lower volumes for bananas in North America and Europe as outlined by Rory and Johan, and as expected, adjusted EBITDA declined against a strong comparative period. The first quarter of last year had the benefit of a strong market conditions due to tight supply of product following the hurricanes at the end of 2020.

Higher cost of fruit driven by higher input costs and higher cost of distribution negatively impacted adjusted EBITDA in the first quarter. These higher operating costs were partially offset by higher prices in core markets and the strong performance of our commercial cargo business. Moving to diversified fresh produce EMEA on Slide 14.

Revenue was in line with the prior-year pro forma comparative. On a like-for-like basis excluding the $59 million impact of foreign currency movements and M&A, good revenue growth was seen across the division, largely driven by higher prices across most regions and as by increased foodservice revenue, particularly in the UK.

However, due to the strengthening of the U.S. dollar against European currencies, reported revenue was impacted on translation. Adjusted EBITDA for the first quarter decreased $4.8 million versus the prior year pro forma comparative.

The decrease in adjusted EBITDA was as a result of unfavorable impact from foreign currency translation and due to logistical challenges impacting trading in Northern Europe, as well as the timing of certain South African sales, offset in part by a strong performance in the UK driven by a recovery in the foodservice channel.

Turning to diversified fresh produce Americas and rest of world, revenue for the first quarter increased 10% versus the prior year pro forma comparative.

The increase was driven mainly by higher selling prices at the end of the Chilean cherry season as well by higher average selling prices in North America, offset in part by lower revenue in South American blueberries.

Adjusted EBITDA for the first quarter increased 21.8% driven by a strong recovery in the Chilean grape business, which had a very difficult season in 2021 due to the impact of heavy rains on quality and volumes. We saw good development in the majority of the North American businesses.

However, this was partially offset by higher costs on certain vegetable categories and a resumption of travel costs with the easing of COVID-19 restrictions. And finally, turning to fresh vegetables on Slide 15.

As explained on our full year earnings call, the impact of the value-added salads recall at the beginning of the year had a significant impact on operating results for the segment in the first quarter. We are pleased that the plants all resumed operating at full capacity during the quarter and the authorities have closed the investigation.

We continue to focus on working with our customers to pass through inflation justified price increases and to restore lost SKUs.

In terms of financials, revenue decreased $53 million or 16% due to the impact of lower volumes arising from the recall and temporary plant closures, which was partially offset by significantly stronger pricing in fresh packed vegetables, followed by the plant decrease in volumes.

We incurred negative adjusted EBITDA of $12.7 million for the quarter arising from the recall and plant closures. Revenue was lower and there was lower fixed cost absorption, which contributed to the loss. We also continued to experience inflationary pressures on freight, labor, and packaging costs.

As mentioned earlier, we are pleased with the progress made, but we do anticipate that the turnaround in this segment will take longer than initially expected, predominantly due to the continuing inflationary pressures, which we are managing through price increases.

Moving to Slide 17, we incurred routine capital expenditure of $17 million in the quarter. Within this was the spend on the final 200 acres of farm renovation in Honduras following the hurricanes Eta and Iota.

We are pleased to announce today a cash dividend for the first quarter of $0.08 per share, which we will pay on the July 6 to shareholders of record on the June 17, 2022 continuing our commitment to return cash to shareholders. Our net leverage at the end of the quarter was 3.7 times.

The business typically experiences a working capital outflow during the first quarter of the year. And as Rory mentioned, it has been higher this year due to ongoing disruption to supply chains and input cost inflation. We also had the impact of the exceptional one-off cash cost of the recall of $33 million during the quarter.

Now I would like to hand you back to Rory, who will give an update on our full year 2022 outlook and closing remarks..

focusing on the management of operating costs within the enlarged group, the integration of our businesses, and the delivery of targeted synergies; managing the return to profitability of our value-added salads business and capitalizing on the strong consumer demand that this category continues to display; continuing our focus on expanding our presence in fast-growing categories such as berries, avocados, and organic produce, as well as bringing the Dole brand to new customers, particularly in new markets to new markets across Europe; continuing to actively seek out synergistic and value-enhancing M&A opportunities; and lastly, continuing to monitor the ongoing geopolitical situation in Ukraine and Russia and assessing its impact on our business.

So in closing, we are pleased with the performance of the business during a challenging first quarter and that the results delivered were in line with what we had anticipated. We look to the remainder of the year with confidence that our resilient and diverse business models and exceptional people will enable us to deliver on our targeted ambitions.

And with that, I’ll hand you back to the operator and we can open the line for questions. Thank you..

Thank you. [Operator Instructions] And our first question today comes from Adam Samuelson, Goldman Sachs. Adam, please go ahead. Your line is open..

Yes. Thank you. Good morning, everyone..

Good morning, Adam..

Good morning, Adam..

Good morning. So I guess, the first question is just to clarify on the revised guidance, can you just make sure we quantify kind of the change to the EBITDA outlook that was attributable to FX versus salads and beyond that just to be clear that really you’re kind of holding all the other pieces of the outlook unchanged..

Yes. I mean, on broad terms, it’s probably 50-50 between FX and salads. On the salad business, we’ve made very, very good progress in getting the business up and running, but there’s a little more to do.

I mean, it’s just unlucky that we’ve ended up in the salad business in such an unusual inflationary environment and the retailers as you will have seen from their own results over the last few weeks are struggling as well to adapt to the new environment. So it’s going to take a little bit longer.

And obviously FX, I mean, if you go back at a year ago, the dollar somewhere around 120 at the start of last year to 104, 105 this week, and a big chunk of our profit comes from Europe. So translating that back into U.S. dollars for reporting purposes obviously, it brings down the number. So they’re the main components of it..

Okay. And then you brought up kind of the point about inflation and just would love to get kind of updated thoughts on how you feel pricing is being in received in the marketplace. Any evidence of demand elasticity that you’re seeing on the part of both retailers and consumers in your various categories.

And then how kind of where incremental cost inflation whether it’s fuel and freight or packaging or fertilizer, how you feel you’re able to recover those costs potentially with incremental pricing actions later in the year..

Yes. In our diversified businesses, which have pretty much short-term pricing. We’ve been pretty successful in getting through price adjustments in that segment of the business. On our annual pricing contracts, we had a high degree of success in getting through the prices. There’s no doubt that the inflationary pressures continue.

I think there’s a period of adjustment from consumers, just generally reacting to having less buying power.

And how all of the other elements of the economic chain react to that in terms of wage inflation and giving people more buying power, whether it’s short-term, long-term, the retailers themselves having increased cost base, trying to adjust and trying to get the balance right between keeping demand for the consumers.

So there’s a complex process underway at the moment. In terms of elasticity, no material changes in demand due to neither up nor down, the consumers are pretty much adapting to the new prices out there.

So nothing strategically of concern there, but there’s no doubt that the overall backdrop with a complex inflationary environment just managing it from the consumer having less buying power, the retailers themselves, trying to maintain their own profit margins and ourselves as suppliers predominantly into that sector, trying to react appropriately.

But we’ve had constructive dialogue with all of our customers and we believe we’re making pretty good progress all around..

Okay. And if I could just squeeze one more and maybe this is just for Frank. Just any council on phasing of earnings since second quarter and the back half as we think about kind of the cadence, obviously last year, I think the layout of the quarters I think was somewhat unusual for you.

So any council on how we think earnings will layout over the balance of year..

Yes. As we said that in there, the phase in – was the stronger first half last year, because of the reasons that we stated there in the announcement. So we would expect probably the recovery – comparative recovery in the second half of the year.

And probably the more – probably comparable one would be the outturn for 2020, 2020 is probably a more direct comparator..

Okay. That’s really helpful. I’ll pass it on. Thank you..

Thank you. And our next question comes from Ben Bienvenu of Stephens. Ben, please go ahead. Your line is open..

Hey, thanks. Good morning. So I want to ask about – you mentioned you’ve taken some price, you plan to take additional price. When you look at the revenue guidance that the update that you provided this morning.

Can you talk about the buckets of FX impact versus incremental pricing that’s incorporated into there? I mean, it sounds like there’s not a lot of demand elasticity, so maybe the volume expectations haven’t changed, but just any clarity there would be helpful..

Yes. I mean, there’s a few moving parts, Ben, and the revenue guidance, we scaled back some business in Holland last year, which was an impact on it. FX, I think we call out in the press release, correct me if I’m wrong, it’s something of $112 million of a negative impact in the period on revenue.

So it’s quite significant given the magnitude of our business. And then in volume, broadly speaking, holding our volumes level for the year. So I think that’s the summary of it, Ben..

Okay. And then understanding that you’re – the products you sell are definitely defensive within the consumer purchasing basket. Could you talk about – you talked about translational headwinds associated with your – but the inflation is changing consumer spending habits both in the U.S. and internationally.

There’s particularly acute inflation in Europe. I guess, what would you say, whether it’s shift and how the customer is purchasing your products or where that would be helpful to hear.

And then what are you guys doing to maybe encourage customer engagement with your products, whether it be innovation or otherwise?.

Yes, I mean, there are mixed trends across the different markets that we operate in. Some of our markets we’ve seen are recovery in the food service business, gradually, post the pandemic. The UK is a particular standout first where that business has recovered as food service activity increased.

We’ve lots of ongoing interactions with our retail base to try and encourage consumption of our products in store tasting lots of other programs to try and do that and underpinned with the Dole brand in the U.S. market in particular. So I think the overall – the pressure on consumers buying power hasn’t had a material impact on fresh fruit.

I think people are continuing to look at the healthier eating trends. I think we are getting some benefit from post pandemic where health and wellness is still a big factor in people’s minds.

So I don’t know, Johan, anything further you could add there on this?.

No, I think you hit it. I mean, the customers are looking for affordability, so our bananas are very affordable. So we still see people going into buy bananas. We see the buy – people buying value added are more people with higher incomes. They are not as impacted. They don’t change their habits very much. So therefore, we see good traction still in that.

And when it comes to diversified business, we basically in all different categories and also there we see relatively good demand. And also I want to add that because of COVID and everything, there were less promotions, especially in our salad category. And those promotions are coming back, and those are also driving volume.

So overall with the focus on affordability and sustainability, we feel that we are still very good place and therefore we see relatively good volumes in – within produce..

Okay. Understood. Thanks very much..

Thank you. And our next question comes from Chris Barnes of Deutsche Bank. Chris, please go ahead. Your line is open..

Hey, good afternoon. I guess, first, I just wanted to clarify the impact of the banana supply adjustments that you guys called out.

Is that expected to be weighted to any particular quarter, like, the second quarter or is it just going to be balanced throughout the balance of the year?.

Yes..

It’s mainly the….

Go ahead, Johan..

Yes.

It’s mainly an impact for the first half of the year, when we now adjusted the balance, because normally, we go into the year a little bit long of volume because the market is very good normally for bananas, especially, in some of adjacent markets, but – because of the war in Ukraine, those markets cannot fell off and they were not as strong in pricing.

Therefore, we adjusted the supply. So you would not see that impact in the second half..

Okay. Got it. And then, I mean, you talk a lot about pricing actions today to recover cost inflation.

But could you just comment on what other actions you’re taking to drive productivity and cost savings throughout the organization? I mean, to the extent you do receive increased pushback from here as retailers adapt to the inflationary environment, like just trying to understand what other levers you have to protect EBITDA..

Yes. I mean, in times like this to take a critical look at all aspects of your business, Chris. So we’re go – we’ve obviously been trying to get geared up to react to all the needs of the IPO, quarterly reporting, conversion to U.S. GAAP over European numbers.

And now, we’re going to start a very intensive program to look at all of our cost structures associated with our admin at back office to see if we can streamline that a little bit further. So within all elements of our business as part of our ongoing processes, we’re looking at our own internal costs, our own internal efficiencies.

And if there are better ways of doing things, automation, technology, constantly looking at even the production side, is there a better way of picking, better ways of packing. But that’s an ongoing process that probably there’s a heightened focus on during these times of increased costs.

And, I mean, on freight, obviously, there’s a limited amount that we can do. We have the balance of our own ships, and as Johan highlighted on the backhaul services, we’ve been getting some offset from those services.

And then it’s working closely with our customers to get the balance right in terms of getting the price increases through that the consumer understands. But I think everybody does because it’s not unique to our sector, these inflationary trends across a wide, wide, wide range of sectors. So a lot of self help in this.

We do take a close hard look at how we do everything right through from production through to marketing administration and all other aspects of the business. And it’s a close and microscopic look at all the costs incurred to see if we can extract any further efficiencies from the business..

Okay, great. That’s very helpful color, Rory. And just last one, if I may, on the new receivables facility, to the extent you actually utilize it, could you just clarify if those transactions have any recourse for you just from a financial liability perspective? Thanks..

Yes, I can answer that one. Basically, what we did as part of the overall financing agreement package that we were putting together, this is the final element of it and we put in place a $255 million receivables facility. And those – under that facility, there is no recourse if we use that, there’s no recourse to the company.

It’s a salable receivable..

Perfect. Thanks so much..

Thank you. And our next question comes from Roland French of Davy. Roland, please go ahead. Your line is open..

Thank you, and good morning gents. A couple of questions on my side. Maybe just starting with the balance sheet and you called out some consolidation opportunities potentially in your prepared remarks.

And clearly, there’s some working capital timing in that Q1 profile, but just trying to dial into what firepower you might have through 2022 in context of maintaining the 3x leverage targets? Start with that..

Thanks Roland. Yes, I mean, we’re going to be cautious, obviously, Roland, just in the current environment in terms of we’re not going to unduly stretch the balance. And the only thing I can say to you is that, as you know from following us for a long time, we’ve always found the appropriate balance to find an answer if the right opportunity arises.

And we’ve every confidence that we have enough capacity between the package facility. So we’ve got to be able to take advantage of appropriate opportunities for us. But we will be conservative at the moment. No doubt about it..

Got it. Okay, thanks.

And then just in terms of the guidance, can you confirm whether that reduction in the vegetable business, is that located predominantly in the bagged salads business? Or is there an element of the fresh packed within that too?.

Predominantly in the bagged salads..

Okay.

And any color just in terms of that that industry backdrop in fresh packed?.

In fresh packed, we’ve done a lot of work in realigning that business. It’s performing better this year, and so we’re pretty comfortable where we are on that.

I don’t know, Johan, if you want to add a little further on the fresh packed side of things?.

No, you’re right on. We took an approach last year when we cut back some volume and the industry did that overall and it’s – and it’s working well, the strategy is working..

Okay. Thanks.

And maybe just finally any update on, on synergies and maybe include within that maybe some parameters around the scale of the Exotics business?.

Overall when it comes to synergies we are working according to plan and the main thing then that we’ve done during the last quarter is we did a rebranding in Ireland and Denmark. It’s a small thing, but it’s actually emotionally quite a big thing and it also brings really the company much more together when you say you work for the same company.

So it’s a small step, but a very important step. And when it comes to the Exotics, we had big ambitions to become one of the major players in the European markets in avocados and separately we were medium size players, but now putting it together, we had a very good position.

And what difference – differentiates us from the rest of the main competitor is that we believe that we are actually going to have a little bit of late-mover’s advantage because a lot of the people now have built-up some relatively big and expensive infrastructure in the ports, let’s say in Holland, whereas we are going to try and focus and use our extensive ripening network and warehousing network that we have in the markets.

So we are going to jump one step directly closer to the markets, be closer to the customers be quicker to adjust to supply. So we believe we are in a very good position to take a relatively big piece of the avocado business..

Okay. Guys, that’s a nice color. Thanks very much, and best luck, Frank..

Thanks Roland..

Thank you. [Operator Instructions] And our final question at the moment comes from Ken Zaslow of Bank of Montreal. Ken, please go ahead. Your line is open..

Hey guys, how are you? Couple of questions, one is, if banana – if the banana business was a little bit weaker, but it didn’t change your guidance why do you suspect that that didn’t change your guidance in any way, if it came in a little lighter? And what is the actual path to recovery for the bananas? Is it just that you just wait for the advance come back? Is Ecuador oversupply an issue? Is Russia and Ukraine absorption, how does that play out?.

Yes. I think in terms of our banana business that came in pretty much in line with our expectation. Ecuador obviously is a big issue for Ecuador primarily as a country; it’s still a single largest exporter of bananas in the world and 20% plus of its market has come under pressure since the Russian/Ukraine invasion.

You look at Russia, Belarus and the Ukraine it’s a 200 million people market, and there is – there are still a reasonable amount of supplies going into that market because food is not subject to sanctions, but there are a lot of pressures because of the banking sanctions.

It may stabilize over time and it may recover a little bit, but a lot of that fruit is not capable for phytosanitary and other reasons of going into the European or the U.S. market. And indeed the incremental costs from the basic costs of the fruit are so high now that the risk reward is not worth it.

So we see a reduction in volume coming out of Ecuador in total over the – over the coming year or so. And that’s the – where that ends long-term is going to depend on the ultimate outcome of Russia and Ukraine and whether food supplies both ways get back to a higher degree of normality. But it’s an uncertainty.

I think in broad terms our banana business, we’ve taken a lot of actions to cut back volume into those excess markets, and to the markets have been affected by it are big supermarket business, our control over the supply chain of our own ships particularly in the North American market and into the Northern European markets have left us with a strong ability to work our way through the current environment..

Maybe if I can add there, Rory is that just if you look at the banana business we have been in a very good position this year and we continue to be in a good position where we put them on our own ships, and since the ocean cargo business has been so competitive, we’ve been able to sell open space, which means that we’ve been able to prioritize price over volume.

Therefore we’ve been able to push some really good pricing increases through. And the comparables are that we had very high prices last year because of a tight supply in the first half then the prices came down. Then in the end of this year, we were able to renegotiate the prices again, basically up to the same level as we had last year.

So this year we’re going to have the same prices for this full year instead of last year when we only had the high prices in the first half, that’s the explanation..

Perfect. The next question I have is just a follow-up. You said that you’re able to raise prices but the promotional activity is actually accelerating.

How do you balance promotions versus racing prices and how does that work? Net-net is it still a price increase? Is some of the promotions discounting some of the price increase? How does that balance work?.

It is a price increase. It’s just that during COVID there, and the increases in demand that we had in Value Added salads during that period made it impossible for the stores to staff with the right people, for us to produce. So there was not – there was no possibilities to do any pricing promotions.

Now we have a balance in our supply in a different way. Staffing is maybe not great in the stores in the retails, but they are on a position when they need to drive volumes again. We are price increases, but yes there are promotions, but it’s not taking away from price increases..

I think they are not material count to the overall equation, but tactically used to try and maintain and boost consumption..

Great. And then my very last question is you said that there was a consolidation opportunity. I think you said in vegetables.

Is that an accelerated consolidation opportunity? Is that just typical strategic stuff that you’ve always, cause you always have a consolidation story, but it seems like you mentioned it in, I believe the vegetables division when you said it.

I didn’t know if there was something of interest that you wanted to kind of elaborate on and I’ll leave it there and I appreciate your time?.

No, there’s nothing specific that we’re going to highlight. But we’re constantly looking and reexamining the strategic positioning of all the players in those individual segments.

And obviously with the Fresh Vegetable and the dynamics around that business over the last year in particular you always have a close look at, and we do think there are opportunities for change there, but there’s nothing imminent on that..

Great. I appreciate it guys..

Thank you. We have no further questions. So I’ll hand the call back over to Rory for any closing remarks..

Okay. Thank you. I think just in summary we made some very good progress on the very difficult scenario that we had with the Value Added salad recall. Just a little bit lucky that we had such a recall against the backdrop of an unprecedented world that we’re currently living in. I think we’ve done a lot of work.

We’re back on track with a little more to do. The strengthening of the dollar where the dollar has become the safe haven, that’s a little bit unhelpful to us for sure.

I think our fundamentals, our global strength, our infrastructure, levers, very well-positioned to get through this year in a satisfactory way and hopefully then when the world returns to a more normal place moving forward in future years. So thank you very much for joining us today..

Thank you. Ladies and gentlemen this concludes today’s call. Thank you all for joining. You may now disconnect your lines..