Landec Corp.'s fiscal second-quarter earnings fell 61% as unfavorable weather conditions resulted in severe produce shortages that pressured margins, offsetting continuing revenue growth in the food-packaging company's vegetable business.
Weather conditions in the East Coast, California and Mexico caused green bean and broccoli shortages, the company said Thursday.
To meet high demand for its specialty-packaged vegetable products, Landec's food business Apio Inc. had to buy large quantities of produce that cost more than contract prices, Landec said. Apio Inc. has posted continued growth in recent quarters, but these shortages negatively impacted profits by $4.4 million.
Landec lowered its full-year earnings outlook in November in anticipation of the shortages, and now expects an income range of flat to 5% growth, versus the up to 20% income growth previously predicted. The company backed its 6% revenue growth estimate.
The company previously said it expected shortages and quality issues to continue in the third quarter.
For the quarter ended Nov. 24 , Landec posted a profit of $3.5 million, or 13 cents a share, down from $8.9 million, or 34 cents a share, a year earlier. Revenue climbed 4.7% to $120 million as the company's Apio Inc. revenue climbed 4.1% to $111.1 million. Gross margin narrowed to 11.4% from 16.2% as the cost of product sales increased nearly 11% to $105.9 million.
