Wednesday 9th May 2012, 18:01 Hong Kong
Chiquita records opening quarter loss
Group slips to net loss of US$11m for the first quarter of 2012, as revenue is hit by lower banana prices in key markets
Chiquita Brands International has announced that it turned in a net loss of US$11m (€8.4m) during the first quarter of the year, down from a profit of US$24m (€18.4m) in the corresponding period last year.
The US-based fresh produce multinational attributed the loss to lower revenue, charges related to European shipping reconfigurations and the company's headquarters relocation, as well as other exit activities.
Net sales came in at US$793m (€609m) for the three-month period, down 4 per cent on the US$824m (€632m) recorded in 2011, primarily due to lower pricing in bananas which included a force majeure surcharge in the year-ago period in North America.
"Our first quarter results were impacted by near-term challenges in our business," said Fernando Aguirre, chairman and CEO. "In Bananas, lower prices in each of our markets impacted both our revenues and comparable income for the quarter. Our North American banana business remains stable. In Europe, tight banana supply, particularly from Ecuador, helped improve local pricing sequentially during the quarter; however, this was not enough to overcome the impact of higher fuel costs and lower European exchange rates. The constrained supply availability also hampered expected sales volumes."
Banana sales fell 3 per cent to US$520m (€399m) on lower dollar-equivalent pricing in Europe and lower pricing in North America, with comparable operating income down to US$25m (€19m) from US$56m (€43m) in 2011.
In the salads and healthy snacks category, net sales remained consistent year-on-year at US$238m (€182.7m), with comparable operating income down to US$2m (€1.5m) from US$6m (€4.6m) on the 'adverse effect of lower retail value-added salad sales volume'.
"We are making progress on our strategic initiatives to take advantage of long-term growth opportunities, but these initiatives will take time to show in our results," he added. "In salads, we have adapted our structure and strategy to be more successful and profitable. We realised significant quality improvements and improved efficiencies to increase the pace of product innovation on our branded salads. Our purpose is to improve shareholder value. Given the inherent complexity of managing a global business from farm to shelf, we are focusing on leveraging our most important strength, our brand. That enables us to outsource those elements of our business that are asset intensive to focus on our unique competitive advantages."
In its outlook report, Chiquita stated that while it anticipated a challenging year, it would seek long-term sales and profitability growth by 'leveraging scale within its core businesses'.