MLP outsources pineapple sales

The move will help the company save $1.5 million in 2008

Maui Land & Pineapple Co. said yesterday it is outsourcing the North American sales, marketing and distribution of its sweet, fresh pineapple, Maui Gold, to California-based Calavo Growers Inc.

The transition, effective Dec. 1, will result in the closing of MLP's Northern California operation and the layoff of nine employees. MLP said its savings in 2008 will be about $1.5 million.

In conjunction with that announcement, MLP said it had a third-quarter loss of $155,000 versus a loss of $2.5 million a year ago.

Revenue fell 28.5 percent to $28.5 million from $39.9 million.

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Maui Land & Pineapple. Co., looking for ways to turn around its money-losing pineapple operations, has agreed to have California-based Calavo Growers Inc. take over North American sales, marketing and distribution of Maui Pineapple Co.'s sweet, fresh pineapple -- Maui Gold.

The outsourcing, effective Dec. 1, will result in the closure of Maui Pineapple Co.'s Northern California office and the layoff of nine employees who handled those functions for the mainland and Canada.

Some of those employees may be rehired by Calavo, said David Cole, chairman, president and chief executive of MLP.

Cole said MLP should realize cost savings of about $1.5 million in 2008 from the North American outsourcing.

MLP made the announcement in conjunction with its third-quarter earnings, which showed a sharply narrower loss of $155,000, or 2 cents a share, versus a loss of $2.5 million, or 34 cents a share, a year ago.

Revenue fell 28.5 percent to $28.5 million from $39.9 million.

"In response to shifting market conditions (in MLP's agriculture, real estate and resort units), the company is reducing overhead, rescheduling capital projects, and moving from fixed to variable costs where appropriate," Cole said.

The company's agriculture losses, predominantly from pineapple, widened in the quarter to $5.6 million from $4 million a year ago, after MLP took a $2.7 million charge in connection with the shutdown of its canned pineapple operations.

The restructuring included disposition of equipment, material and supplies; employee severance charges; supply contract losses, and the adjustment from fixed to variable costs.

Pineapple revenue, because of a reduction in sales of processed products, fell 43.3 percent to $10.3 million from $18.2 million.

MLP, which said it will continue to produce a small volume of canned pineapple through the end of this year, is focusing on its fresh pineapple operations and the processing of pineapple juice.

"This agreement brings significant marketing, sales and logistical power to our pineapple business," said Gerry Watts, general manager of Maui Pineapple Co. "Calavo's growing presence in the tropical and specialty produce sector, combined with their modern warehousing and distribution capabilities, will bring significant economies to our mainland operations."

MLP said it still will continue its sales and marketing operations in the mid-Pacific with a focus on increasing consumption within Hawaii and in select Asian markets.

Calavo, whose two principal business units handle fresh avocados and perishable processed products, diversified in 2003 with the acquisition of Maui Fresh International to become the largest importer of Hawaii-grown Kapoho Solo papayas.

MLP's third-quarter earnings were buoyed by its real estate segment, whose operating profit more than quadrupled to $9 million from $2 million primarily due to increased earnings from Kapalua Bay Holdings LLC and two noncore land sales transactions in September.

Revenue, though, slipped 8.4 percent to $10 million from $10.9 million as sales slowed.

The resort segment had a wider operating loss of $3.1 million, versus $2 million a year ago, and revenue fell 27.8 percent to $7.8 million from $10.8 million.

MLP blamed the shortfalls on the improvement-related closures of the Village Course at the end of February, the Ritz-Carlton, Kapalua hotel in July, and the partial closure of the Bay Course in August.