Welcome everybody, and thank you for joining our Q3 2021 conference call. Joining me on the call today are Rory Byrne, Chief Executive Officer, Johan Linden, Chief Operating Officer, and Frank Davis, Chief Financial Officer. This conference call is being webcast live on our website and will be available for replay after this call. During this call, we'll be referring to presentation slides with supplemental remarks, and these are available on the investor relations section of the Dole plc website. Please note our remarks today will include certain forward-looking statements within the provisions of the Federal Securities Safe Harbor Law. These reflect circumstances at the time they are made, and the company expressly disclaims any obligation to update or revise any forward-looking statements.
Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors, including those set forth in our SEC filings and news releases. Our earnings release, financial report and related materials for the Q3 can be found on our website at doleplc.com/investors. Information regarding the use of non-GAAP financial measures may also be found in the notes section of the release, which also include the reconciliation to the most comparable GAAP measures of adjusted EBITDA, adjusted net income, net debt, and adjusted earnings per share. The details of our statutory forward-looking statements disclaimer can be found in our SEC filings and the presentation slides we'll be discussing today. With that, I'm pleased to turn today's call over to Rory.
Thank you, James, and thank you all for joining us on our first earnings call as Dole plc following our IPO in July. As well as discussing our Q3 2021 results and performance year to date, I'll also provide you with a high-level overview of the Dole plc business. Later in the presentation, I'll give you some further insight into our long-term strategy. Johan will give an update on trading, progress being made on synergies and comment on some of the strategic initiatives being undertaken across the group. Finally, Frank will take you through the financial review. With that, turning to slide five. Well, 2021 has been a transformative year for the group. Dole plc was formed by bringing together Total Produce plc and Dole Food Company, followed by the IPO of this new company at the end of July.
We received net proceeds of $398.9 million from the IPO, and all of the proceeds were used to strengthen our balance sheet by repaying higher cost debt. Concurrently with the IPO, we also successfully completed a $1.44 billion refinancing package, providing us with well-structured liquidity to support our continued growth. For the purpose of this presentation, and as set out in our press release issued today, the financial information has been pre-prepared on a pro forma basis, illustrating Dole plc's results as if the merger, IPO and refinancing had all occurred on January 1, 2020. This is consistent with the pro forma financial information presented in the Form F-1 filed with the SEC in connection with the IPO.
Since the IPO at the end of July, we've been focused on the integration and reorganization of management across the enlarged entity, implementing our synergy strategy, and further strengthening our public company reporting and compliance functions. Looking at our financial performance, we've delivered strong results for the first nine months of the year against the backdrop of a unique economic environment. Pro forma revenue and pro forma adjusted EBITDA are both up versus the comparable prior year period, with pro forma revenue up 4.5% and pro forma adjusted EBITDA up 12.6%. We're very pleased with this growth when set against the context of a strong prior year and also given the complexities currently being experienced in supply chains across the globe.
The talent and dedication of our people, along with the diversity of our operations, both from a geographic and a product and service offering perspective, as well as our sophisticated asset base, has helped us to manage the industry-wide supply chain pressures. We've witnessed firsthand the continued benefits of our integrated business model and having control over assets within our supply chain, such as our fleet of 11 ships that we operate and approximately 17,000 containers in our tropical fruit business. This has enabled us to continue to deliver in a challenging environment. Despite the benefits of our integrated supply chain, we've not been immune from industry-wide cost inflation, which emerged earlier this year. As increasing inflationary pressures emerged, we initially focused our efforts on optimizing our supply chain to limit cost impacts.
However, now that it's clear that inflation is pervasive and persistent, we have reacted by increasing prices in the segments of our business that have longer term contracts, such as our tropical fruit division and value-added salads. We're pleased that our customer base has largely been supportive and understanding. Within the diversified segments of our business, pricing tends to be more dynamic, and to date, we've been able to largely pass through cost increases by working closely with our suppliers and our customers. We're also very pleased with our financial position following the IPO. At the end of Q3, our net leverage stood at 2.76 times, which is below our targeted level of 3x. Our well-capitalized balance sheet creates the basis for long-term sustainable growth for the group, and I'll provide a recap of our long-term strategy later in the presentation.
Today, we've also announced a cash dividend for the Q3 of 2021. We pay a dividend of $0.08 per share on January 7, 2022 to shareholders of record on December 17, 2021. We're providing a full year 2021 pro forma revenue target in the range of $9.2 billion-$9.4 billion. A full year 2021 pro forma adjusted EBITDA target in the range of $390 million-$400 million. This corresponds to year-on-year pro forma growth of 2.6%-4.8% and pro forma adjusted EBITDA growth of 4.9%-7.6%. I'll provide further details on our outlook later in the presentation. Turning to slide 7. I'll now give you a brief overview of the Dole plc business.
We are the global leader in fresh produce at nearly two times larger in terms of revenue than the next largest company in this category. We produce, we market, distribute an extensive variety of fresh fruits and vegetables across the globe. Our produce is sourced both locally and from around the world from a broad sourcing network and from our own farms. We have sales in over 80 countries, with North America and Europe being our largest markets, but also with a presence in parts of Asia, Latin America, the Middle East and Africa. Four operating divisions of Dole plc are fresh fruit, fresh vegetables, diversified fresh produce, Americas and rest of world, and diversified fresh produce EMEA. Fresh fruit division is responsible for farming, sourcing, and distribution of bananas, pineapples and various other tropical fruit, as well as providing commercial cargo services.
Principal markets, geographic regions served are North America and Europe. Fresh Vegetables is responsible for the distribution and sale of fresh packed vegetables as well as value-added salads which include prepacked salads and meal kits. The two diversified divisions are responsible for the production, marketing, and distribution of a wide variety of fresh produce to customers primarily in North America and Europe across the retail, wholesale, and food service channels. Dole plc has leadership positions in categories such as bananas, pineapples, value-added salads, grapes, and fresh packed vegetables. We also have a focus and expanding presence in faster growing product categories such as avocados, berries, and organic produce. Fresh produce is a key and growing category within the overall food sector. We are seeing an acceleration of growth driven by health and wellness trends.
Consumers are increasingly focused on their physical and mental well-being, on sustainability, and they're shifting towards plant-based vegetarian and vegan diets as a way to improve their health and reduce their own carbon footprint. As a result, the category itself is focused to experience annual growth of over 2.7% per annum over the next five years. One final point to mention is that, the market that we operate in is still highly fragmented, with significant potential for further consolidation. As Total Produce, we used M&A as a successful lever for growth, and we expect Dole plc to do the same. In slide eight, just to remind you, we've illustrated the wide geographical presence of Dole plc, as well as giving some insight into the highly valuable and strategic asset base that we have.
We operate from over 250 facilities across the globe, including over 160 distribution facilities and 75 pack houses. We operate 12 cold storage facilities and five salad manufacturing plants. We own over 109,000 acres of land. This owned acreage, combined with the multi-continental sourcing model, enables operating flexibility and product availability throughout the year, and enhances our ability to manage costs. Another important strategic asset is our fleet of ships. We own 13 ships and operate 11 of those ships ourselves, with two currently out on charter. Included in the 11 are two new ships we took delivery of earlier this year, the Dole Aztec and the Dole Maya.
Our 11 owned and operated ships are used for the shipping of tropical produce from our production facilities in Central and South America to our customer network in North America and Europe, and support our commercial cargo business. Having our own fleet of ships provides greater certainty of distribution and enhances our supply chain transparency and control. With that, I'll pass you now over to Johan to give an update on operations.
Thanks, Rory. Good morning, everyone. I want to start by emphasizing both my own excitement for what we have started here at Dole plc, as well as my satisfaction with how we have progressed to date with our first steps as a new company. As you heard already from Rory, the performance of the combined business year to date on a pro forma basis has been strong and provides an excellent foundation for the opportunities ahead. Turning to slide 11. As Rory has already noted, we are not immune to inflationary pressures, and so we have had to take actions to address the ongoing challenges, including to initiate price increases. In the fresh fruit and fresh vegetables division, which represents 45% of our pro forma revenues, we typically have longer term contracts in place, and so we have needed to address the current issues proactively.
In that context, we have been pleased with the response from our customers to the price increases that we have looked for, and we are progressing well towards having the pricing in place to offset current inflationary pressures in full in 2022. In the diversified fresh produce division, which represents 55% of pro forma revenues, pricing tends to be on a short-term basis and any inflationary cost increases can be passed through the supply chain relatively quickly. While we are pleased with the support from our customers, we also know that in this environment we need to be highly focused and attentive to all aspects of the supply chain so we can continue to deliver excellent products and service to our partners and a healthy business for our stakeholders. Looking at the 4 divisions in more detail. This has been an abnormal year in fresh fruits.
Throughout the year, we have endured significant cost impacts on both our sourcing base and supply chain following the November 2020 hurricanes in Guatemala and Honduras, more recently, by the current inflationary pressures. To deal with the increased cost pressures, we have been working with our customers to increase pricing and expect to have the pricing we need to offset the current inflationary impact in place by the end of 2021. It's been a challenging year in Fresh Vegetables division for two main reasons, both of which are being addressed. The first is that our fresh packed vegetables business has suffered from persistently weak market pricing, caused in part by oversupply as the market planted for a greater recovery in the food service sector than has been possible as COVID-19 has lingered.
To address this issue, we have reduced our own planting to limit our market exposure in 2022. We have also seen some short-term relief in the form of better pricing as the market has achieved more balance with the move to the winter sourcing locations. The second impact has been the significant inflationary challenges that have affected the value-added salad business, particularly in relation to freight, labor, and packaging. Heading into Q4, we have already implemented price increases with value-added customers to help address the inflationary challenges we saw early in the year. In our diversified business in Americas, we have overcome specific weather-related challenges by relying on our diversified range of products and services, and have grown our business by both further strengthening our customer relationships and by continuing to grow in high growth categories like berries and avocados.
Finally, in our diversified EMEA business, we have withstood the continued impact of COVID-19 related disruptions, both in supply and in demand patterns, by building on our strong customer relationships and providing unrivaled service in a challenging environment. We also reorganized our Dutch businesses, which has contributed to strong growth. Next, I would like to mention some of the investments we have made, which we believe will drive the business forward in the years to come. Most critically, we took delivery this summer of two new vessels, Dole Aztec and Dole Maya, that will serve our U.S. Gulf markets, and which we believe are foundational assets for our current ability to manage today's unique supply chain challenges.
Year to date, as numerous global ports have suffered with congestion and delays leading to equipment shortages and rising shipping costs, we have been able to insulate ourselves from the worst of the crisis by relying on our own assets and by operating out of ports where we have our own operating teams on the ground. In addition to the protection of our integrated supply chain has supported us in the current environment, I'm very pleased to say that both the size of the new vessels and the new routes we have implemented bring both a better environmental footprint as well as reduced costs. To give you some color, with the two new ships, we were able to retire four old ones. We have also invested significantly in replanting in Honduras after several of our company farms were devastated by last year's hurricanes.
We believe our quick action to reinvest and the incredible work of our team on the ground positions us well to drive further cost competitiveness in the business in the years to come. Another important strategic initiative for us this year was the acquisition of an additional pineapple farm in Costa Rica that is adjacent to one of our existing farms. This farm had been one of our long-term growers, and the owner had been looking to sell the business. The acquisition secured the supply, allows us to access additional grower margin, and gives us opportunity to expand margins by driving synergies through the combined farms. Finally, we have also invested this year in important packaging and cooling assets at source and close to the market.
We believe investments here not only make sense for the operations on a standalone basis, but will also give us an enhanced capability to further drive group synergies. On the topic of synergies, I would like to make a few specific points on the additional steps we are taking to position ourselves for delivering on our synergy targets for the years to come. Firstly, and of critical importance, the executive management team of Dole plc are quickly building on our existing relationships to establish a foundation for long-term growth. All the necessary functional progress that come with any mergers are advancing well, and we have integrated several key management teams across the legacy Dole Food Company and Total Produce businesses.
We believe this cross-pollination will not only bring new practices and ideas to existing areas, but will also foster the culture we need within our management teams to sustain our existing success and develop our new opportunities. We have already made some small investments together to drive further integration, like in the French market, where we are planning to grow our presence with new ripening capabilities, and in South Africa, where we are consolidating some of our sourcing operations. We have also established a new cross-company logistic function that is currently laying the foundation for key group-wide projects. We are also seeing good forecasts for growth in selling and sourcing for both core products and higher growth products like berries and avocados.
As we look forward into 2022, we expect to make further strides with sourcing efficiencies, particularly in South America and in South Africa. While seeking opportunities and extension of the Dole brand in important European markets, and also with specific progress on our logistics, berries, and avocado strategies. With that, I will hand you to Frank to give you the financial review.
Thank you, Johan. I'm very pleased to be reporting our Q1 earnings as Dole plc following our listing on the New York Stock Exchange. As Rory mentioned at the outset, the financial information referred to today and as outlined in our press release has been prepared on a pro forma basis, illustrating Dole plc's earnings as if the merger, IPO, and refinancing had occurred on January 1, 2020. This methodology is consistent with the pro forma financial information presented in the Form F-1 filed with the SEC in connection with the IPO. Turning first to slide 15. Dole plc has delivered strong results with year-to-date pro forma revenue up 4.5% to $7.1 billion at the end of September. The increase in the year-to-date pro forma revenue was driven by growth in the two diversified fresh produce divisions and the fresh vegetables division.
For the Q3 of 2021, pro forma revenue is 0.3% ahead of the prior year. Year-to-date pro forma adjusted EBITDA is up 12.6% to $337.7 million, compared to $299.9 million for the first nine months of 2020. The increase in the year-to-date EBITDA has been driven by EBITDA increases in the fresh fruit division, following a strong first half of the year and from diversified fresh produce EMEA. This was partially offset by EBITDA decreases in the fresh vegetables division, due primarily to weakness in our fresh packed vegetables business due to an oversupplied market, as well as inflationary pressures in value-added salads.
Additionally, an EBITDA decrease in diversified fresh produce Americas and rest of world, due to the impact of adverse weather events at the outset of the year. Pro forma adjusted EBITDA is down 35.4% for the Q3 of 2021 versus the comparable quarter in 2020. The decrease was predominantly driven by EBITDA decreases in fresh vegetables due to weak markets in our fresh packed vegetables business and inflationary headwinds in value-added salads. In addition, we experienced EBITDA decreases in the fresh fruit division due to the ongoing supply chain impacts following last year's hurricanes. Moving to the next slide.
On a pro forma basis, adjusted net income was $131.6 million for the first nine months of the year, which corresponds to a 22.5% increase from the first nine months of 2020. The increase is predominantly due to the increase in pro forma adjusted EBITDA, offset by an increase in depreciation charge and an increase in the earnings attributable to non-controlling shareholders. Looking at each of the divisions now in more detail and starting with fresh fruit. Throughout the year, we have seen cost pressures from the supply chain impact caused by the hurricanes Iota and Eta in Honduras and Guatemala in November 2020, and more recently from the inflationary pressures which have increased as the year has progressed.
However, more positively, we have also seen good market pricing in the first half of the year and have been continuing to optimize our supply chain, including taking delivery of our two new vessels, the Dole Aztec and the Dole Maya, to improve our own costs. Q3 pro forma revenue was down 0.8% versus the prior year due to lower volumes of bananas in North America and lower banana pricing in Europe, as well as lower pricing for pineapples in North America. This was offset in part by higher pricing in North America for bananas, volume growth in pineapples in North America and in Europe, as well as growth in commercial cargo revenues due to higher freight rates.
Year-to-date pro forma revenue is up 2.7% compared to the prior year due to higher banana pricing in North America and higher pineapple pricing across all markets, as well as growth in commercial cargo, partially offset by lower banana volumes in all markets. Q3 2021 pro forma adjusted EBITDA was down 53.2% compared to the prior year due to lower revenue and higher transportation costs in North America and higher produce costs driven by materials increases as well as the continued impact on supply chains from last year's hurricanes in Guatemala and Honduras. These cost increases were partially offset by improved performance in our commercial cargo business, as well as by the benefit of currency hedges in our European markets.
For the year to date, pro forma adjusted EBITDA is up 27%, largely due to higher revenue, in particular with the benefit of higher pricing in the U.S. banana market and the growth of the commercial cargo business, partially offset by higher sourcing costs following the impact of the hurricanes last year and inflationary headwinds. Moving to the next slide. Fresh vegetables. This division has had a challenging year for two main reasons, as Johan mentioned earlier. The fresh packed vegetables market has been oversupplied in 2021, with the level of plantings based on an expectation that the recovery in food service would be greater than has come to pass. This additional supply has put downward pressure on our markets for fresh packed products. With the outlook for COVID-19 in 2022 still uncertain, we are cutting back our own plantings to reduce our exposure.
Within the value-added salads business, we have persisted through significant inflationary pressures due to both the U.S. labor shortage and inland transportation challenges. However, as Johan mentioned, we have already successfully adjusted pricing with customers to help offset cost pressures from earlier in the year. Pro forma revenue increased 1% in the Q3 of 2021, primarily due to higher pricing in the value-added salads business, offset in part by lower volumes in this business. Production was impacted by labor availability challenges in the quarter. In addition, lower volume and lower pricing in fresh packed vegetables led to a decrease in revenue. Year-to-date pro forma revenue increased 4.3% due to higher volumes and pricing in the value-added salads business, driven by strong market demand and a better mix of products sold. This was partially offset by revenue declines in the fresh packed business.
Q3 2021 pro forma adjusted EBITDA decreased by 90.8% primarily due to persistently weak fresh packed vegetables markets. The impact of inflation in inland transportation as well as in packaging and labor continued to increase. However, the early action taken on increase in prices with customers and value-added salads also started to offset some of these pressures in the quarter. Finally, pro forma adjusted EBITDA for the first nine months decreased 84.8% primarily again due to the impact of persistently weak fresh packed vegetables markets and inflationary challenges mentioned earlier. Looking next at diversified fresh produce Americas and rest of world. Q3 2021 pro forma revenue was up 4% primarily due to a strong performance in the berry category and growth in apples and kiwis from Chile, offset partially by some port-related challenges in North American export business.
Pro forma revenue for the first nine months of 2021 was up 5.2% primarily due to higher revenue from berries and more incrementally by growth in the Chilean export fruit business. Q3 2021 pro forma adjusted EBITDA was down 52.4%, largely driven by the continuing impact of adverse weather during the Chilean grape growing season in the first part of the year, partially offset by good growth in berries. Pro forma adjusted EBITDA for the year to date was down 15.1%, with the decrease again substantially driven by the adverse weather events that impacted the Chilean grape season. This was offset in part by EBITDA improvement from the berry category, as well as in asparagus and in the Chilean top fruit and stone fruit.
Finally, diversified fresh produce, EMEA, has had a strong performance in 2021 year to date. A reorganization of our Dutch businesses as well as a recovery in the food service channels contributed to this strong growth. Pro forma revenue decreased 0.8% for the Q3 of 2021 due to the divestment of a business in the Q3, partially offset by the incremental contributions from step-up acquisitions and a favorable impact of currency translation. Pro forma revenues is up 5.9% for the first nine months of the year due to positive currency movements and strong performance across all channels and the contribution from step-up acquisitions in the period. This was partially offset by the incremental impact of divestments in the Q3.
Q3 2021 pro forma adjusted EBITDA was up 9.4% due to a good recovery in our Dutch businesses following the reorganization mentioned previously, as well as a strong performance across other European markets and the favorable impact of foreign currency translation. Pro forma adjusted EBITDA for the year to date is 33.8% ahead of prior year, again driven by recovery in our Dutch business and good performance in Ireland and the U.K., driven by the reopening of food service channels. Our Brazilian export business also performed strongly. The results also benefited from favorable foreign currency translation. Looking at our capital allocation and leverage on slide 21, our capital expenditure strategy is focused on investing where we see the greatest opportunity for profitable growth to support our existing strong market positions in core products.
This combination, we believe, ultimately drives the best returns for our shareholders. While in a typical financial year, we expect that our capital expenditures will be broadly in line with our depreciation expense. This will vary at times, primarily as our reinvestment cycle with major capital assets is not linear. In 2021, we made a number of strategic investments. We made $53 million in final payments for our two new vessels in the first half of 2021. In addition, we spent $16 million reinvesting in Honduran farms impacted by last year's hurricanes and $25 million in acquiring pineapple assets that bring a unique strategic value to our operations. As already mentioned previously, we have announced a quarterly cash dividend for the Q3 of 2021 of $0.08 per share, which we will.
We will be paid early, in early January to shareholders on record on December 17, 2021. Finally, we will continue to focus on maintaining leverage within our targeted leverage level of 3x net debt to adjusted EBITDA. At the end of the Q3, our net leverage ratio was 2.76x. Now I'd like to hand you back to Johan, who'll give an update on ESG initiatives being undertaken across the group.
Thanks, Frank. The fresh produce industry is delivering the most nutritious of foods to the world at the lowest environmental impact. Increasing consumption of fruits and vegetables is almost universally recommended by health leaders, doctors, and nutritionists. Proper nutrition plays a crucial role towards improving the quality and longevity of life for millions of people that are suffering in growing numbers by health issues related to unhealthy eating. In comparison to other food sources, the environmental impact from produce-related emissions and water usage is among the lowest, making it an exceptional food category to tackle the food needs on an ever-increasing world population. While the fresh produce industry is well positioned, we at Dole plc have formally committed to ambitious environmental and social targets for our company and intend to lead the produce industry on the journey to establish even more sustainable ways to operate.
We're taking this journey in partnership with the broad stakeholder groups while staying anchored in science and the latest research. We are dedicated to continuous improvements in sustainability and sustainable production from field to fork. In 2022, Dole plc will finalize a new combined framework, materiality assessment, and a set of goals during the first half of the year. We are also committed to disclosing our emissions as a combined entity to CDP for the first time in 2022. This will include Scope I and Scope II data and qualification of Scope III emissions is well underway. With that, I will pass you back to Rory to provide our outlook for the remainder of full year 2021.
Thanks, Johan. I suppose even with the complexities that we're currently experiencing in the world throughout the supply chain, we do still expect full year pro forma revenue and pro forma adjusted EBITDA growth. For the full year of 2021, we expect to deliver pro forma revenue in the range of $9.2 billion-$9.4 billion. We also expect pro forma adjusted EBITDA in the range of $390 million-$400 million or mid-single-digit growth on the prior year. For the remainder of 2021 and looking into 2022, we expect our fresh food division to continue to deliver a robust performance by leveraging its significant asset base and customer relationships as well as due to the continuing recovery in Honduras.
For fresh vegetables, we expect to continue to leverage the strong underlying growth in the value-added segment of this division, to both grow our own sales and to support a pricing model and customer relationships that allow us to respond to cost pressures where they cannot be offset. Finally, in our two diversified fresh produce businesses, we expect to continue to build on our success with key customers by leveraging the benefits of Dole plc's integrated supply chain to bring our customers even closer to source and by continuing to expand our service offerings in the marketplace. Overall, we remain confident that the excellent underlying fundamentals of our category, our primary position in this category, and our high-quality asset base and people will combine to position us for success for the remainder of 2021 and into 2022.
On slide 27, we've set out the elements of our strategy to deliver sustainable long-term growth. Our growth strategy is focused on expanding our presence in the large and growing fresh produce segment. As well as continuing to focus on our core business, we're setting out to capture market share in the faster-growing categories such as avocados, berries, value-added salads, and organic produce. These categories are growing at above average growth levels and together represent circa 25% of our total revenue. Our integrated supply chain provides competitive advantages, and our goal will be to continue to further optimize this to unlock additional opportunities for growth. We also own the leading brand in the sector, the Dole brand, a brand which is aligned with quality, freshness, and a healthier lifestyle for consumers.
We'll continue to utilize the strength of this iconic brand and expand its presence into additional categories and markets. We'll deepen our market penetration by continuing to focus on new product innovation and strengthening our customer relationships through enhanced customer insights. This is particularly relevant in the value-added salads category, and it's been one of the main reasons for our growth in this division. Finally, we've historically grown Total Produce through acquisitions, and we continue to look for synergistic M&A opportunities. Market is fragmented and growing, and we believe we are well positioned to capitalize on the opportunities that may be presented. In closing then, we're very pleased with the company's strong performance during 2021 and the outlook for the remainder of the year.
Our position as the global leader in fresh produce with a wide geographic footprint and diverse product offering, coupled with the talent and dedication of our people, leaves us well positioned to deliver long-term sustainable growth. With that, I'll hand you back to the operator, and we can open the line for questions. Thank you.
Thanks, Rory. If you'd like to ask a question, please press star followed by one on your telephone keypad now. To withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. The first question today comes from Adam Samuelson of Goldman Sachs. Your line is open.
Yes, thank you. Good morning, everyone. So I guess my first question is thinking about 2021. Obviously, there's been strong performance in parts of the business, and especially in the first half of the year, and the specific challenges and inflationary headwinds that you've experienced in the second half. Next to a full year EBIT dial up, it seems pretty consistent with how you would think about your long-term growth framework. With what you know today, in terms of the pricing actions that you've taken, in terms of the price, in terms of managing the inflationary environment that you're in, addressing some of the specific things in the fresh vegetables, is there a reason to think that you wouldn't be able to achieve that kind of mid-single digit EBITDA growth in 2022?
It seems like your stock remains very skeptical of that view, and I'd love to get your perspective.
Yeah. Thanks, Adam. Yeah, you know, I mean, I think what you really gotta do is perhaps even look back at the history of when we were Total Produce on a standalone basis, you know, from demerger with Fyffes back in 2006 to the creation of this new entity. We had something like a compound growth of 400%. In 2019, on a standalone basis, in Total Produce, we had achieved over 10% EPS growth, and then in 2020, a further 9.1%. If we were running the numbers on a standalone Total Produce basis for 2021, you know, we'd have really strong numbers again. You know, it's a complicated world out there. Lots of, you know, headwinds, lots of challenges around sudden surges in inflation.
I think lots of unexpected consequences arising from the COVID crisis. The most important thing for me is that we've stood up to all those challenges and the diversity of our earnings across all the different geographies that we operate in, the different product segments that we operate in. We've been able to react, and we've been able to hit the target that you know, we pretty much set at the time of IPO for 2021. We haven't really been surprised by anything that's emerged. With everything that we know, we've no reason to believe that we can't continue on the same path going into 2022.
Okay. That's really helpful. So maybe on capital allocation. This comes to kind of a stock valuation point. You talked about both on M&A, and that makes sense. Your leverage is slightly below the long-term target. How could we think about opportunistic share repurchase as a use of capital, particularly where the stock is now? It just would seem be particularly attractive use of cash, with the stock trading well below the IPO price and your leverage below kind of your target range.
Yeah. I mean, it's an interesting point, Adam, and obviously we keep our eyes on all of the potential, capital allocation opportunities open to us, including buyback. In some ways it's a bit contradictory to having just recently IPO'd the company to start to buy back very quickly. There is no doubt that, you know, we will keep that tool in the toolbox, as an alternative. I mean, clearly at the current rating, it's difficult to buy even small companies at that value, let alone the biggest company in the world. We're well aware of the dynamics. We keep our eye on it. You know, it's one of the elements of capital allocation that over the medium long-term is there for us to use.
Okay. That's all helpful, Rory Byrne. I'll pass it on. Thank you.
Thanks, Adam.
Thank you. Our next question today comes from Christopher Barnes of Deutsche Bank. Christopher, your line's open.
Hi, good afternoon. I guess I just wanna follow up on Adam's first question on the inflationary pressures. It's good to hear that you think you can still do a mid-single digit growth in EBITDA next year. Just, I mean, it seems like we're past the peak inflation, peak pressures on many commodities, but freight especially, like inland transportation remains challenging, even if there should be relief coming as capacity is online and more drivers return. We're also starting to hear more and more about incremental labor and wage rates going forward. I mean, with all that in mind, I mean, Johan, you mentioned that pricing and fresh fruit is enough to offset current levels of inflation and the diversified segments are also taking pricing later this month.
I guess to the extent you see additional pressure from here, like how well do you think 2022 is protected? Are there any areas you believe need additional work from here, whether in terms of pricing or other actions on your part? Any color you're able to provide there will be very helpful. Thanks.
Yeah. Thanks, Christopher. I mean, obviously we are in a very dynamic world at the moment. You know, as I said in answering Adam's question, I think, you know, there've been huge consequences from the COVID pandemic that, you know, dislocation of containers, transport, disruptions to the labor market, uneven demand from consumers. Lots and lots of things that has caused surges in inflation in certain categories. You've seen the chip issue around production of cars and things like that. That's some extraordinary events that nobody particularly predicted. I mean, so far as we can, you know, we've tried to analyze what the inflationary pressures are in certain aspects of our business.
We can lock in costs for the full year. I think as Johan said as well, in the diversified fresh produce side of our business, pricing tends to be very short term as well. In that division, we really, you know, it tends to be seasonal, it tends to be quite variable, depending on supply and demand out of different regions of the world into the market, and that tends to be more accustomed to coping with ongoing cost chain changes, and you tend to be able to pass it through in a much more fluid way to the customers. People are used to variable pricing in that. It's our fixed price areas that we've got to be a little bit more careful in analyzing.
You know, we've got some, you know, flexibility around major divergences and costs. I mean, who knows, Christopher, looking into 2022, we've been surprised by lots of things over the course of last year. So far as we can and with what's within our control and the commitment and dedication of management, you know, we're feeling comfortable with where we are.
Got it. That's all very helpful.
Maybe Johan would like to add something further on that, perhaps.
No, I think you're right on. I mean, we were a little bit surprised on all the price shocks that happened in the beginning of the year, and we thought maybe they would be transitory. Therefore, we were a little bit slow to react. Now we have reacted, and we have the things in place that we feel we need going into the new year. We're gonna stay attentive, and we also have dialogue with customers to see if we over time, not directly now, but over time, can change some of the contracts. We are building indexes into the contract. When something happens, automatically prices will be changed. We have some of those indexes already in place when it comes to fuel for North America, but we're also looking at now putting other indexes in place.
Okay, very helpful. Thank you.
The next question comes from Patrick Higgins of Goodbody Stockbrokers. Your line is open, Patrick.
Thanks. Good morning, everyone. A couple of questions for me, if that's okay. So firstly, just obviously a good start to the year, first half, Q3, slightly more difficult or quite difficult. How has trading continued into Q4? Have you seen some of the challenges around supply chain or labor availability ease? I guess added to that, how is pricing, the price increases within the fresh or the value-added salads business being received? Second, just on the synergies, the $30 million-$40 million. Interested to hear if there's any kind of early delivery on them or perhaps to comment on the expected timeline delivery of some of them into next year. Then finally, just on cash flows and net debt, obviously a strong performance to end of September.
How should we think about cash flows into year-end? Should we anticipate, I guess, an improvement in net debt versus that September number, or is there any kind of outflows we should be aware of? Thanks.
Thanks, Patrick. Yeah, I mean, in terms of looking at how you'd look at first half, Q3, Q4, I think the best way to look at that is to look at the forecast I've given you for the full year. You know, again, the most important point from my perspective is that the information that we gave to analysts in the analyst day that we had pre the IPO, we're very comfortable that that was an accurate reflection of what was going to evolve over the course of 2021. We continue to believe in the numbers then, obviously, that they're reflected in the full-year outlook. I think we're comfortable with that.
In terms of synergies, again, Johan might want to comment a little bit further on it, but, you know, obviously we've kicked off the process on a whole range of projects. Again, we believe that, you know, we've no reason to believe that the synergies won't flow in the same way that we had anticipated at the outset of the IPO. You know, we're making progress. We've restructured our management to bring together the two teams in a better way. You know, we've dedicating the resource to the different projects. You know, we're looking carefully at trying to bring together the different elements of our business in categories such as berries or avocados.
You know, the berry one, we're having a very thorough look at what we've got today and what we want to have tomorrow and how we might get there. I think the timetable in terms of delivery of the synergies will be within that outlined at the time of the IPO. In terms of cash flows and net debt, I don't know, Frank, maybe first of all, Johan, if you want one minute, one second on the synergies, and then maybe Frank might deal with the cash flow and net debt question.
Maybe one second, then on the synergies. What we set out when we went to market and some of the initial publication that we sent out, we said the synergies would be in the medium term between 30 and 40, and that would build up over time. For the number that we're looking for next year, we feel relatively comfortable about. So far, we have progressed well. We have centralized the logistics function, and we can see some benefits when we're negotiating already. We have merged certain sourcing activities, especially when it comes to South Africa, but also when it comes to avocados and berries for Europe. That is progressing well.
What we've also done is that we have moved some people over between the companies, and that's actually the best thing you can do because then you really get synergies working quickly because then they can explain for the other side what's going on and they can tell them where they're coming from, the benefits of the other side. That's working very well. We have identified where to expand the use of the brand within Europe. Overall the team is just working very well. We feel very good about the synergies. Maybe just one thing to add some light on the Q3.
It was expected also to a certain extent to have a weaker Q3 when you think about the hurricanes that we had last year because the hurricanes led to a tight market for bananas in the first half, and that was expected. We had good pricing, so we had very good development during the first half, whereas we also knew that there would be, to a certain extent, some oversupply in the Q3 area. That happened, and now the market is tightening up again. We feel comfortable. I think that's, Rory, what I can add.
Frank, then on the cash flow question, perhaps.
Sure, yeah. Patrick, as you know, in our industry, we tend to have a working capital inflow at this time of the year, trending towards the end of the year. I would anticipate maybe a slight improvement. The reason why it's tempered is that we also have some CapEx at the end of the last quarter as well. That will temper that. Overall, I would hope it's certainly a slight improvement, depends where it lands, but down to timing. A slight improvement I would expect, Patrick, overall.
It really is timing.
Thanks.
Our next question comes from Bryan Spillane of Bank of America. Your line's open, Bryan.
Hi. Thank you, operator. Good morning, everyone. Just two questions for me. One, just as we're thinking about the price increases that you've recently implemented, to the extent that we start to see relief on costs, how much of that pricing do you think will end up having to be rescinded or will it not? I guess I'm trying to understand how we should be thinking about matching your inflation with net pricing and, you know, to the extent that we see inflation begin to moderate next year, would we expect that to also flow through in terms of lower prices? I have a follow-up.
Yeah, I guess, Bryan, you must be in the optimistic category about inflation if you think that it's gonna recede so strongly. I think what Johan said earlier is what we've done is we're trying to introduce a few new categories into the variable element of the annual fixed prices. For example, on the fuel surcharge, it can go up or down depending on movements in the price, and some of the other elements will do something similar. You've got downside-
Okay.
upside protection in it.
Okay. Then, second question, just around M&A. You know, you touched on it a little bit earlier in the call, and I guess I'm curious with the pressure, right, that is on, you know, the your peers in the industry. Has that maybe loosened things up a little bit in terms of, you know, properties that you might be interested in and, you know, could it actually, you know, accelerate or enhance the M&A activity?
Yeah, I mean, I think it's not entirely fair to say that our peers are under enormous pressure. I mean, I don't quite see it like that. The industry is actually doing pretty well. You know, you look at, say, the Fresh Del Monte results. They actually had a poor Q3, but the rest of their numbers were pretty good. You look at the European companies that have, you know, disclosed numbers or we're familiar with their. You know, they're doing fine. The industry is really, you know, it's not in a negative phase in any way. You know, the fundamentals in the industry are pretty strong. You know, we did very well during the pandemic. We managed to, you know, keep running pretty well in the whole pandemic difficult time. The dynamic hasn't changed fundamentally.
Obviously we'd like to have a much stronger share rating. That would help us and make it more encouraging for us to do it. No, there hasn't been a dramatic change in the available opportunities. We've had a lot more people approach us given our scale, our size, and seeing that, yes, being part of this very interesting entity would be something very interesting. So that does open up more opportunities. You know, it's, we're examining each one on its merits.
All right. Fair enough. Thank you.
I don't know, Bryan, if that answered your question. Yep.
Yeah. No, it definitely does. Thank you very much.
Our next question today comes from Ken Zaslow of BMO. Your line's open, Ken.
Hey, good morning, everyone. Just had a couple questions. My first one is, when I think about your first half, how much of the benefit was from force majeure pricing? When you look forward into 2022, how do the comps compare to that? Will your net pricing, because you did talk about mid-single digit growth, does that change how you think about the profit in 2022 on a comparable basis?
Yeah, I think if you go out to 2022, the dynamic over the course of the year is quite likely to be different compared to the quarterly dynamic over the course of 2021 for sure.
Can you give us some framework to how much force majeure did actually add in the first half of 2021 just so we have-
You know, I think.
-model .
Yeah, I don't think it's a question of force majeure having added anything to the equation because we had significant costs associated with the hurricane damage in both Honduras and Guatemala. It's more really just, and you know, you probably could have argued for a slightly longer force majeure to compensate for that. It's a complex equation and, you know, I think we'll see a more balanced pricing over the course of 2022, but it's a little early to call that yet. We don't, you know, really look at this on a quarter by quarter basis. You know, we've got to look at this in the context of an entire year.
Yes, there can be movements from quarters year on year, and yes, the dynamic may be different, and we expect it to be different in 2022 to 2021. We look at the full year and we're still confident of the full year 2020 to 2022 outcome. I mean, force majeure really covered the cost of the Honduras and Guatemala hurricanes and no more than that.
Okay. I'll take it offline then. My next question is, as you've seen the pricing, can you talk about the elasticity to which you're seeing with, consumers and how is that playing out?
Yeah, I think if you look at, say, bananas in particular, you know, they've been relatively cheap to the consumer, so it's been very elastic to price. We haven't actually seen a fall off in consumption. You look at our other broader range of products in the diversified section, as I said earlier, they're used to quite a bit of variability in pricing depending on, you know, origin. So it's not the same selling in the U.K., Chilean grapes as selling Spanish grapes, for example, with all the cost differential between transport, et cetera, bring them to the market. Then as the season changes, people adapt to price. We haven't seen any impact on demand as a result of price increases.
As I say, the baseline for bananas in particular is quite low and, you know, consumers are happy to continue eating bananas even at a slightly more expensive price.
Okay. My last question is, when you think about the logistics issues and the challenges that you face, does that at all have any impact on your synergy realization going forward, particularly as you're trying to expand into Europe and use the brand maybe more on the sales side of it, even more than the cost side of it? Have you seen any impact on that? Then, I'll leave it there, and I appreciate your time. That's all.
Yeah, yeah. Ken, I don't think we have seen any material impact from that on our synergy projects. No.
Great. I appreciate it. Thank you guys very much.
Thank you. Thank you.
Thank you. Our final question today comes from Roland French of Davy. Please go ahead.
Hi. Thank you. Morning, afternoon, everybody. Thanks for all the color, and thanks for taking my questions. I think I have three on the pad. Just maybe just firstly, you may have said it and I just didn't pick it up, but broadly, if you think of kind of the COGS basket, where is inflation running at? And I guess allied to that, how should we think about what pricing is required to mitigate that inflation headroom? And then just second, I think, Johan, you mentioned that, you know, customers had largely been supportive to date and that heading into 2020 you've taken, you know, the requisite pricing actions to mitigate that inflation. Just in context of the contract negotiations within fresh fruit in the banana category in January, how should we think about that?
i.e., have you done a component of the book as we sit today, but by and large there's still a lot of work to do in January with those retailers? Then maybe the final comment, again, just for clarification, you've kind of alluded to, you know, confidence around mid-single-digit growth in 2022. Just in terms of the shape of that, clearly, you know, I'm not driving you into quarters, but clearly you've had a very strong first half this year. But maybe even just on a margin, top line margin basis, if there's anything that we need to think about there, i.e., could revenue be stronger in context of pricing? I'll leave it at that. Thanks very much, gentlemen.
Okay. Thanks, Roland. I mean, in terms of the COGS inflation by category, you know, it's varied by different elements of the cost chain. You know, paper costs have gone up, fertilizer costs have gone up. Things like transport costs are different for different operators. There's some competitive elements of that that are not the same for all operators in the game. We think in some cases we've got an advantage. I don't think we want to get into very specific elements of inflation around micro elements of our cost of goods lines. We're confident that the price increases that we are seeking will compensate us for those cost increases going forward.
In terms of contracting, the process obviously is underway at the moment. You know, we're having constructive, positive interaction with all of our key customers. I suppose that underpins our confidence that, you know, we will be able to get through the required level of price increases. I think everybody, because it's not just in our segment, but it's in pretty much all industries, you're seeing inflation and sudden inflation across different elements of the cost chain for many, many industries. It's not unique to one particular operator. It's not unique to us as a company within it. You know, our industry is very similar to many, many others, so it's a conversation that the key customers are having with many, many sectors.
That perhaps makes it a little bit more understandable to the customers, and we're getting a better reaction from the customers as a result of that. In terms of the growth targets for 2022, I mean, to be in line with the projections that we gave at the time of the IPO, for all the reasons that we set out in the F-1 that I think, Roland, Judy, you're familiar with all of those. You know, we're not breaking it down into any new or different expectations for 2022 versus the expectations that we gave earlier in the year as part of the IPO process.
Okay. That's very constructive. Thanks so much.
Thank you.
Okay.
We have no further questions in the queue, so I'll hand back for closing remarks.
Okay. I'd just like to say, thank you very much to everybody for taking the time to join us on our very first earnings call and update call. Obviously, it's the first time we've had the opportunity to interact with the investors and analysts since we went public. You know, we hope you've got a better understanding of the medium term, long-term objectives that we've got as a group and a better understanding and appreciation of the scale and size of our operations, the consistency of our earnings, the broad diversity of earnings that we've got. Thank you for your support and hopefully we'll see a better share price when we come back for the next quarter. Thank you very much today.