Lower salad volumes contribute to loss at Chiquita
August 4, 2011
CINCINNATI — Lower sales, especially of salads, led to an 18% decline in income for Chiquita Brands during the second quarter.
Income for the quarter ended June 30 was $78 million, equal to $1.71 per share on the common stock, down from $95 million, or $2.11 per share, during the same quarter of the previous year. Sales during the quarter were $870 million, down 5% from $916 million.
“Our second-quarter results reflect the challenges we highlighted previously,” said Fernando Aguirre, chairman and chief executive officer. “As expected, salad volumes in the second quarter were lower than last year. However, the combination of our marketing investments, Fresh Rinse technology and better cost efficiencies are already delivering new distribution points, which will result in better volume comparisons the rest of the year.
Also, in bananas, we delivered another solid quarter of performance despite softening of local European pricing in late May and June.
“Importantly, we have taken several additional steps in the execution of our strategies to improve our performance. We recently initiated organizational changes to realign our salad business overhead cost structure and embed our global innovation and marketing functions into our business units. These actions will save approximately $15 million annually. We also completed the first phase of debt refinancing, which eliminated our most expensive debt and will reduce our interest costs by $11 million annually while providing more operating flexibility. Overall, our confidence in our ability to generate future profitability in North America was key to recognizing an $87 million tax benefit this quarter.”
Operating income for the bananas segment was $60 million, down 6% from $64 million during the same quarter of the previous year. Sales for the segment were $555 million, up 2% from $547 million during the same quarter of the previous year.
The Salads and Healthy Snacks segment had operating income of $4 million, down 86% from $30 million during the same quarter of the previous year. Sales for the segment were $253 million, down 12% from $288 million during the same quarter of the previous year.
During the six months ended June 30, the company as a whole had income of $102 million, or $2.25 per share, up 20% from $85 million, or $1.90 per share, during the same period of the previous year. Sales for the quarter were $1,695 million, down 2% from $1,725 million during the same period of the previous year.