Chiquita Brands International Inc. reported operating income of $2 million for the third quarter this year, compared with a $17 million loss in the third quarter in 2012.
Ed Lonergan, president and chief executive officer for the Charlotte, N.C.-based company, and other Chiquita officials discussed the third quarter financial report with stockholders and media Nov. 7.
They reported a net loss of $18 million for the quarter, but said they are pleased with that number when it’s compared to the $67 million net loss in the third quarter of 2012.
For the second consecutive quarter the banana giant reported good news from its packaged salads operations.
“For the first time since 2007, we are leading retail value-added salad category growth,” Lonergan said.
“In Q3, we grew retail value-added salads volumes 7.5% year over year driven by improved velocity at existing customers and new customer acquisitions in both branded and private label products.”
Private labels make up about 60% of the 4 million case increase in Chiquita's bagged salad business, Lonergan said. About 20% of the company’s total salad business is in the foodservice sector with the remaining 80% in retail.
Lonergan said Chiquita added more salad stock keeping units in 2013 than in the previous three years combined.
Many of those products just hit retailer shelves this fall, giving Chiquita officials confidence that more volume growth is in their future.
“Those products include kale, chopped salad kits and salad bags with two conjoined packs so consumers can open one and keep the other as fresh as possible until they need it,” Lonergan said.
He said additional salad product launches are set for the first half of 2014.
When Lonergan succeeded Chiquita’s former CEO Fernando Aguirre in October 2012, he joined a company that had posted a 92% drop in profits for the second quarter, compared to its 2011 quarterly report.
The company’s stock value had been falling for a year when Lonergan was hired and Chiquita had logged four straight quarters of declining revenue. Net income for the second quarter of 2012 was $2 million, compared with $78 million in the second quarter of 2011.
Lonergan, who is described by produce industry analyst Dick Spezzano as a “turnaround specialist” announced Chiquita would return to its core businesses and strategies, a 180-degree change from Aguirre’s nine years of work to diversify the company.
“We remain focused on efficiency actions both in our organizing structure and in our operations and sourcing,” Lonergan said during the Nov. 7 call.
“We are delivering our 4% target EBIT margin in bananas and remain on an appropriate glide path to deliver our target EBIT margin of 7%-8% for salads by the end of 2015.”
There are some ongoing costs associated with Chiquita’s consolidation of three salad plants and a distribution center in the Midwest into one facility.
The new facility is not yet fully operational, but Lonergan said full productivity should be achieved in 2014.
Chiquita also reported improvements in its banana business. Supply and demand was relatively balanced well into August and the company was able to hold high-season pricing for longer than is typical, especially in the European and Mediterranean markets, Lonergan said.
However, increasing volumes in North America boosted Chiquita’s banana business, with sales up 2.6% in the third quarter to $458 million, compared to the same quarter in 2013.
Comparable operating income increased to $20 million in the third quarter this year, compared to a $2 million loss in 2012’s third quarter, according to Chiquita’s balance sheet.
Note on clarification: The original version of this story did not specify that the 60% private label bagged salad statistic is in relation to the 4 million case increase, not Chiquita's total bagged salad business.