Reporting better than projected results for the first half of 2013, Chiquita Brands International Inc. saw the first quarter-over-quarter increase in its salad business since 2008 during the second quarter of this year.
Ed Lonergan, president and chief executive officer of the Charlotte, N.C., company said Aug. 8 the salad growth came in branded, private label and foodservice products.
“With private label and branded we are adding 4 million cases (of salad) on an annualized basis,” Lonergan said.
Net sales of Chiquita’s salad and healthy snacks — which the company does not separate on its balance sheet — increased 3% to $260 million compared to $252 million in the second quarter of 2012.
Resisting the opportunity to change projections based on the good news from the salad division, company officials told investors and media during a conference call that they continue to anticipate 7% to 8% growth by the end of 2015.
Banana news was not as robust. While North America volumes increased 11.1% in 2Q of 2013 compared with 2012, pricing decreased 2.9% resulting. Overall, Chiquita’s banana net sales decrease of 2.5% to $519 million compared with $533 million in the 2Q of 2012.
Declines in banana volumes in core European markets and the Mideast, plus supply issues related to weather conditions in Latin America and Ecuador, created some problems. But, Lonergan said new contracts in North America executed in late 2012 and early 2013 will eventually boost the company’s overall banana picture.
In its “other produce” division, Chiquita posted a 29.7% decrease in net sales for 2Q in 2013, logging $34 million compared with $49 million in the 2Q of 2012.
Chiquita’s overall net income for 2013’s second quarter was $31 million, compared with $6 million for the same period in 2012. The company reported operating income for the quarter of $42 million, compared with $25 million in 2012. Net sales declined from $833 million in the 2Q of 2012 to $812 million in the 2Q of 2013.
Consolidation of their Midwest salad plants is costing more than expected, Chiquita officials said. They spent $7 million on the project in the second quarter.
Another $7 million in expenses is expected in the third quarter, but Chiquita officials said the salad consolidation should be complete by the beginning of the fourth quarter with no expenditures anticipated.
Bad weather in salad growing regions of the U.S. also hindered their salad business, and they expect that problem to continue through the third quarter.
Lonergan said the company’s attention to overall cost cutting, dubbed “Project Evolution,” includes improving logistics and efficiencies in growing operations the company controls. He said Chiquita owns or leases about 40% of the land that produces its bananas.
“Our competitor controls a little more than 50% of theirs,” he said, adding that Chiquita will continue to strategically buy and lease more land as prime lots become available.