Chiquita profit plummets, search on for new c.e.o.

by Staff
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CINCINNATI — Chiquita Brands International is looking for a new chief executive officer and working on restructuring activities to increase long-term profitability after income dropped 92% during the second quarter.

Income for the quarter ended June 30 was $6 million, equal to 12c per share on the common stock, which compared with income of $78 million, or $1.71 per share, during the same quarter of the previous year. Sales for the quarter were $833 million, down 4% from $870 million during the same quarter of the previous year.

“While we do not believe that Chiquita’s second-quarter results reflect the sustainable earnings potential of our business, our results exceeded our expectations in spite of the significant impact from the dramatic reduction in the value of the euro and difficult pricing comparisons to 2011,” said Fernando Aguirre, chairman of the board and chief executive officer. “The negative euro impact alone was $26 million. Our banana business continues to be stable. Our sales volumes were at similar levels to the same period of 2011, but the product supply surcharge that was in place for 2011 in North America and the large and rapid decline in the value of the euro resulted in difficult pricing comparisons to 2011. In salads, although we had lower retail sales volumes than the year-ago quarter, the volumes were higher than previously forecasted as we experienced increasing retail sales velocity on a same store basis, and we delivered cost reductions from 2011.”

Comparable operating income for the Bananas segment was $29 million, down 52% from $60 million during the same quarter of the previous year. Sales for the segment were $533 million, down 4% from $555 million during the same quarter of the previous year.

The Salads and Healthy Snacks comparable operating income was $11 million, up sharply from $4 million during the same quarter of the previous year. The segment had sales of $252 million, down slightly from $253 million during the same quarter of the previous year.

For the six months ended June 30, the company sustained a loss of $6 million, which compared with income of $102 million during the same period of the previous year. The company had sales of $1,627 million, down 4% from $1,695 million during the same period of the previous year.

Along with the release of its financials, Chiquita said its board and Mr. Aguirre, who has been c.e.o. for nearly nine years, agreed it is time to hire a new c.e.o. Mr. Aguirre will continue as c.e.o. until his replacement has been found, and he will remain one of the company’s largest shareholders.

Chiquita also is starting a cost-cutting initiative aimed at saving $60 million annually by streamlining its administrative and manufacturing costs. The company plans to get rid of some senior management positions and spend less on research and development. The cost-cutting plan should be mostly done by the next quarter, Chiquita said, and the company will take a charge of $15 million in the second half of the year, mainly due to severance costs.

The company will save approximately $4 million a year following the transfer of its headquarters to Charlotte, N.C., from Cincinnati. The move is expected to take place in November.

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