Weak European results lead to loss at Chiquita

by Eric Schroeder
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CINCINNATI — Solid gains in salads and healthy snacks were not enough to overcome the impact of harsh winter weather across Europe at Chiquita Brands International, Inc. as the company experienced a loss of $9 million in the first quarter ended March 31. This compared with net income of $23 million, equal to 52c per share on the common stock, in the same period a year ago. Net sales fell 4% to $808 million from $842 million.

“Our North American salad and banana businesses performed well in the first quarter,” said Fernando Aguirre, chairman and chief executive officer. “However, as previously announced, European banana demand and pricing were negatively impacted by the harshest winter weather in 30 years and depressed economic conditions that have affected commerce across Europe.

“Revitalizing our European profitability in 2010 is our most important priority. Weeks ago we began implementing a five-point plan to improve pricing, execute significant cost improvements throughout our supply chain, permanently capture the E.U. tariff reductions, reduce our selling and administrative costs and increase distribution, which taken together will enable us to overcome these early headwinds.”

Operating income in the Bananas segment totaled $4 million in the first quarter, down 90% from $40 million a year ago. Net sales fell 2% to $477 million from $485 million. Chiquita attributed the declines to lower pricing and volumes in core European markets.

In the Salads and Healthy Snacks business, operating income rose 54% to $20 million despite an 8% decline in sales to $259 million. Chiquita said the gain in operating income resulted from continued, sustainable cost reductions, such as a more efficient distribution network and improved manufacturing processes, and pricing gains.

Looking ahead, Chiquita said it expects to achieve revenue growth of 1% to 3% in fiscal 2010, down from 3% to 5% previously. The company did maintain its full-year comparable income target of $110 million to $120 million.
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