US: Chiquita Q3 hit by spinach scare, banana prices
Chiquita Brands International reported a third quarter loss of US$96m, or $2.29 per share, due to depressed European banana prices and the US spinach E. coli scare.
The loss compares to a profit of $300,000, or $0.01 per share, reported for the comparable period of last year. Revenue increased by 8% to $1bn, up from $954m last year.
Chiquita shares fell $0.15 to $13.33 at close of trade yesterday, before Chiquita had released the results. The stock fell an additional 6%, or $0.85, after hours to $12.48, dropping below its 52-week low of $12.52.
Delivering the results, Chiquita warned that the E. coli outbreak caused by tainted spinach from California had damaged its Fresh Express pre-prepared salad business. The company also said unusually warm weather in Europe had cut demand for bananas, pushing prices down.
"Fresh Express operations experienced lower sales and unforeseen costs due to consumer concerns regarding the safety of fresh spinach in the United States, despite the fact that no confirmed cases of consumer illness were linked to our Fresh Express products," Fernando Aguirre, Chiquita's chairman and chief executive, said.
During the quarter the company also recorded a one-off goodwill impairment charge of $43m, or $1.02 per share, for writing down the value of Atlanta AG, the company's German distributor.
For the year-to-date, Chiquita reported a loss of $54.1m, or $1.29 a share, compared to earnings of $150.5m, or $3.63 a share, in first nine months of 2005. Revenue rose to $3.4bn from $2.9bn for the first nine months of 2005, partially the result of banana pricing in North America.
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