Chiquita financial report focuses on long-term goals - The Packer

Chiquita financial report focuses on long-term goals

05/08/2012 05:29:00 PM
Coral Beach

Referring to 2012 as challenging, tough and transitionary, executives from Chiquita Brands International Inc. reported a net income loss of $11 million for the first quarter of 2012.

However, chairman and chief executive officer Fernando Aguirre told investors May 8 that the company is making progress with strategies for long-term growth, which include divesting itself of non-core operations and real estate and focusing on what he said is their greatest asset — the Chiquita brand.

Expansion of banana business in North America and Europe, where company officials say it has been under-represented, is part of the plan.

Chiquita also continues to bank on the potential of an expanded Fresh Express salad business and the addition of organics, head lettuce and customized products such as private label salads, as described in its 2011 year-end financial report.

Those moves will enable Chiquita to access a $5 billion total salad market versus the $2 billion branded packaged salad market it has been operating in, according to a statement accompanying the first quarter financial results.

Part of the plan is the consolidation of three salad facilities in the Midwest into one plant in Chicago.

“This is our single biggest capital project in 2012,” Aguirre said. “We expect this to improve salads by one full percentage point. … We won’t own the land or factory in Chicago, and that’s new for us.”

Brian Kocher, chief financial officer for Chiquita, said the company expects packaged salad business to be down 15% for the second quarter of 2012, partly because it is transitioning from old contracts to new ones.

“But we expect retail salads to be flat or only down slightly for the full year,” Kocher said during a conference call May 8.

For the first quarter, Chiquita’s net banana sales were down 3% year-to-year, at $520 million. Net sales of salads and “healthy snacks” products were virtually the same as the first quarter in 2011 at $238 million.

Cutting costs continues to be a key component to the company’s balance sheet. Although the move of its headquarters from Cincinnati to Charlotte, N.C., is not yet complete, Kocher said savings definitely will be realized with the move. He said it appears that the new headquarters won’t cost quite as much as anticipated and is expected to come in under the $30 million budgeted.

With staff reductions and better communication and operations anticipated with the move to Charlotte, combined with the consolidation of the Midwest salad operations, company officials expect to save $8 million annually, beginning this summer.

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