US: Chiquita cuts earnings forecast for 2010
Banana prices in Europe low in Q2, said Chiquita
Produce giant Chiquita Brands International has lowered its forecast for annual profits due to a "sustained reduction" in European exchange rates.
Chiquita yesterday (29 July) set its target for comparable income at US$80-90m, down from the $110-120m it put in place in April.
"We believe our diversification and profitable growth strategy will result in strong profitability for the full year," chairman and CEO Fernando Aguirre said. "However, as we previously noted, a sustained, significant reduction in European exchange rates was not factored into our prior expectations."
Nevertheless, Aguirre added: "Even at the lower income estimate, 2010 will be one of our most profitable years in the last decade, despite the weak economic environment."
Aguirre's comments came as Chiquita reported second-quarter income from continuing operations of $95m, up from the $89m booked in the same period last year.
However, the result was helped by Chiquita's sales of a 51% stake in its Just Fruit in a Bottle beverage business to Danone in May.
On a comparable basis, Chiquita's second quarter income from continuing operations stood at $64m.
Net sales fell 4% during the quarter to $916m due to lower salad volumes in North America and lower banana prices in Europe.
Aguirre said he had seen progress in Europe. "As we expected, we regained profitability in Europe during the second quarter following the unusual weakness of the first quarter. Revitalising Europe is our most important priority and we made solid progress executing a business improvement plan that includes improving pricing, capturing significant cost improvements and increasing distribution, as we leverage the strengths of our branded business."
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