Salads, healthy snacks drive sales for Chiquita - The Packer

Salads, healthy snacks drive sales for Chiquita

02/26/2008 12:00:00 AM
David Mitchell

(Feb. 26) Bagged salad sales are bouncing back for Chiquita subsidiary Fresh Express LLC.

Cincinnati-based Chiquita Brands International Inc. saw a 19% increase in net sales from its salads and healthy snacks segment during the fourth quarter, senior vice president and chief financial officer Jeffrey Zalla said during a Feb. 19 conference call.

Zalla said volume increased 10% compared to the year-ago period. Operating income was $4 million, compared to break-even results in the final quarter of 2006.

“We saw a nice rebound at the end of last year,” said chairman and chief executive officer Fernando Aguirre. “We expect it to continue to rebound. The critical question is whether it will be double-digit growth.”

For the year, net sales in salads and healthy snacks increased 5% to $1.3 billion. Operating income, however, fell $1 million to $31 million, in part because of $18 million in increased costs related to raw products.

Higher costs and other expenses were offset somewhat, compared to 2006 results, by the fact that $12 million in one-time costs related to the 2006 E. coli outbreak did not reoccur. For example, Chiquita raised its marketing costs by $3 million in 2006 in an effort to restore consumer confidence after the outbreak related to bagged spinach.

Overall, Chiquita reported that net sales for the year increased 4% to $4.7 billion. The company reported a loss of $49 million, almost half the $96 million loss it reported a year ago. For the quarter, net sales increased to $1.2 billion with a net loss of $26 million.

In its banana business, Chiquita reported that net sales increased 2% to $503 million for the quarter. Operating income was $33 million, nearly double the fourth quarter of 2006. The increase was due in part to improved pricing in North America and Europe and the strength of European currency.

For the year, net sales were up 4% to $2 billion. Operating income more than doubled to $115 million.

Aguirre said Chiquita to Go bananas are available in 13,000 convenience stores and other locations. He said the company’s goal is to significantly increase that total, possibly to as much at 18,000.

He said the product has tested well at Starbucks, and the company plans to expand the line into similar quick-service locations.

In its other produce segment — all whole non-banana and salad items, such as melons — Chiquita sales were flat at $1.4 billion. The segment lost $27 million, including a $10 million charge related to the company’s plan to exit farm operations in Chile.

Chiquita’s stock was at $18.56 during midday trading Feb. 20 on the New York Stock Exchange.



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