Citrus Woes Cut Alico Income

Ernie Neffbusiness

Alico

Alico, Inc. reported net income of approximately $23.7 million for the fiscal year ended Sept. 30, down from $37.8 million for the prior fiscal year. It attributed the decrease in net income primarily to three factors:

  • A decline in the market price per pound solids for citrus fruit this past 2019-20 harvest season largely attributable to unfavorable industry supply dynamics
  • A decrease in processed box production due to greater fruit drop compared to the 2018-19 harvest season
  • A smaller amount of funds being awarded through the federal disaster relief program in the 2020 fiscal year as compared to the prior fiscal year.

For the fiscal year, Alico Citrus harvested approximately 7.6 million boxes of fruit, a decrease of 6.6 percent from the prior fiscal year. The decrease was principally attributable to greater fruit drop.

The company saw its average blended price per pound solids fall from $2.42 in the prior fiscal year to $1.86 in the current fiscal year, largely due to the Florida citrus crop being greater than expected in the 2018-19 harvest season, which in turn led to high inventory levels at Florida citrus juice processors at the beginning of the 2019-20 harvest season. The price reduction was also impacted by the continued inflow of imported orange juice, though at lower levels than the prior year.

However, due to increased consumption of not-from-concentrate orange juice by retail consumers since March 2020, as evidenced by published Nielsen data, inventory levels at Florida citrus juice processors have been decreasing. The company expects this inventory trend is likely to help improve market pricing for citrus fruit in the 2020-2021 harvest season.

Alico’s harvesting activities were not impacted by the coronavirus pandemic, and there were no disruptions in delivering fruit to the processors. Additionally, to date, the company has not experienced any material challenges to its operations from COVID-19.

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Alico President and CEO John Kiernan referred to “a challenging citrus market, which saw market prices for citrus at their lowest levels in the past 10 years and production down from the prior season. As we look ahead to fiscal year 2021, we believe market pricing will benefit from lower processor inventory levels driven by the double-digit increase in not-from-concentrate orange juice consumption in 2020.”

Alico, Inc. primarily operates two divisions: 1) Alico Citrus, one of the nation’s largest citrus producers, and 2) Land Management and Other Operations, including environmental services, land leasing and related support operations.

Alico bought a large amount of citrus acreage this year. Learn about that purchase here.

Source: Alico, Inc.

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