Chiquita financials improve with focus on bananas, salads

05/07/2013 09:42:00 AM
Coral Beach

Chiquita Brands International Inc.Reporting a turnaround for the first quarter of 2013 compared to 2012, officials with Chiquita Brands International Inc. announced $2 million in net income compared to a net loss of $11 million in 2012.

Ed Lonergan, president and chief executive officer for the Charlotte, N.C.-based company discussed first quarter financials during a conference call May 7. He said he was pleased with performance in the first three months of 2013, which he attributed to a return to the firm’s core business strengths.

“We are on target to deliver our goal of 4% growth in bananas and 7% to 8% in salads,” Lonergan said.

He said Chiquita expects new contracts to total 1 million more boxes of bananas, even though supplies are expected to exceed demands in the remainder of 2013.

Ed Lonergan, Chiquita president and CEOLonerganLonergan said Chiquita is seeing better yields in its own banana fields, which means the company doesn’t have to buy as much fruit. Just less than 40% of the bananas Chiquita will sell this year will come from its own fields, he said.

Net sales of bananas actually dropped 3% to $505 million for the first quarter compared to 2012, primarily because of reduced volumes in Europe and a $12 million hit Chiquita took on its hedges against the value of the Euro, according to the company’s balance sheet.

However, improvements in sourcing and logistics more than offset the sales decreases. The company logged banana operating income of $27 million for the first quarter of 2013, up from the $25 million in operating income from bananas in 2012’a first three months.

Chiquita also saw improvement in its bagged salad business.

The first quarter of 2013 marked the first time since 2007 that Chiquita has seen growth in its Fresh Express salad line, Lonergan said. He said the company does not have a goal of transitioning away from Fresh Express to private label salads, adding that production costs are roughly the same.

Net sales for salads and healthy snacks, which the company did not separate in its financial report, increased 1% for early 2013, coming in at $240 million. Operating income from salads for early 2013 was $8 million compared to $2 million for the first quarter of 2012.

“Yuma temperatures dropped, and there were supply issues that left us without enough product,” Lonergan said.

The Chiquita CEO said the company failed to fill orders for products such as fresh spinach because of the low yields related to the cold weather earlier this year. However, Lonergan said new contracts are in the works and production of private-label salads that began at the end of the first quarter will continue through the year and will boost sales.

The company’s move to consolidate its Midwest salad operations under one roof is also expected to continue to improve the bottom line. Operations began there on a limited basis at the end of the first quarter.

Lonergan said the company is in the process of moving equipment and staff 18 miles “up the road” from three plants in Franklin, Ill., to the new facility in Streamwood, Ill. Chiquita broke ground on the Streamwood plant in June last year. The move is expected to continue through the second and third quarters.



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