California-based fruit company Limoneira (NASDAQ: LMNR) saw its EBITDA cut by almost a third year-on-year in the second quarter of 2016, dropping to US$3.4 million.

The drop can mainly be attributed to higher agribusiness costs and a delayed avocado deal relative to 2015, as both volumes and prices were up for the company's main revenue source - lemons.

Avocado revenue was down by more than 70% at US$1.2 million, but lemon sales rose by US$2 million to hit US$20.8 million in sales.

Around 780,000 cartons of fresh lemons were sold during the period at an average price of US$22.44 per carton, compared to approximately 711,000 cartons sold in the corresponding quarter last year at an average price of US$21.94.

Specialty citrus and other crop revenues were down by US$100,000.

"Our second quarter results reflect higher prices and volume of fresh lemons sold, which were offset by the timing of avocado shipments moving into the third quarter compared to shipments occurring in the second quarter of last year," CEO Harold Edwards said in a release.

The company highlighted that a project to double the capacity and increase the efficiency of Limoneira's packing facilities became operational in March, with expectations the efficiency benefits will be realized in the third quarter. The project is estimated to cost approximately US$28 million.

"I am pleased with the expansion and modernization of our lemon packing house which became operational in March of 2016," said senior vice president Alex Teague.

"We believe we are well positioned to increase the profitability of our lemon business and anticipate meaningful cost savings and increased efficiencies as our lemon packing and sales volume continues to increase."

Teague also highlighted the importance of Limoneira's recent foray into the South African citrus industry.

"We are excited about the recently announced formation of Limoneira S. A. and partnership with South African based Real Citrus as another component of our One World of Citrus model. This represents another step towards," he said.

For the fiscal year ending October 31, 2016, the company continues to expect to sell between 2.7 million and 3.0 million cartons of fresh lemons at an average price of approximately US$23.00 per carton, and expects to sell approximately 8.5 to 9.5 million pounds of avocados at approximately US$0.80 per pound.

Photo: www.shutterstock.com

www.freshfruitportal.com