Limoneira buys stake in Chilean citrus packing operation
Limoneira Co. has purchased a 35 percent stake in a Chilean citrus business for $1.75 million.
Santa Paula-based Limoneira said Tuesday that it had made the investment in Rosales, a citrus packing, marketing and sales operation based in La Serena, Chile. The operation is located in the coastal region of northern Chile, which is a major citrus and avocado-growing region, Limoneira said.
“We are excited about our first international business investment,” Limoneira Senior Vice President Alex Teague said in a statement. “Our management team has a long-standing relationship with Rosales, and we look forward to working with them more closely following our investment.”
Limoneira is one of the largest lemon and avocado growers in the U.S. The company’s second-quarter operating income jumped 35 percent to $3.2 million, prompting it to raise its full-year outlook. The firm now expects operating income of between $10.6 million and $11.8 million this year, compared to previous guidance of $7 million. Large orchard acquisitions in Arizona and California over the last year, coupled with higher lemon prices, prompted the more positive outlook.
The investment in Chile “enables Limoneira to better evaluate future potential investment opportunities in Chile’s vast, productive agricultural properties,” Teague said.
Rosales, which primarily packs and sells lemons, sells its produce into Asian, European, and Chilean markets, Limoneira said.
Going forward, Limoneira will handle Rosales’ lemon sales to Asian markets. In return for the investment, Limoneira will earn equity income and 50 cents per carton on lemon sales to Asian markets, it said, resulting in an estimated at $200,000 to $300,000 per year in revenue.
“With its favorable climate for lemons and other citrus, we have been looking for the right opportunity to enter the Chilean agriculture market for some time and are very pleased with our partnership with Rosales,” Limoneira President and CEO Harold Edwards said in a statement. “Our investment in Rosales is consistent with our long-term strategy to expand our agribusiness internationally as a global, year round supplier of lemons.”
Last year, Limoneira paid $18.6 million to acquire Arizona citrus grower Associated Citrus Packers, followed by an $8.75 million deal to buy 760 acres of farmland in Porterville. Last month, the firm purchased the packing house operations of Marlin Ranching Co. in Yuma, Arizona, in a deal valued at up to $1.8 million. All three deals were aimed at securing a year-round supply of lemons, and Edwards has said in previous interviews with the Business Times that the company would like to consolidate the West Coast lemon industry.
The firm said it is also working on an expansion of its Santa Paula packing facility that it expects to complete in its next fiscal year.