Despite a fourth-quarter loss of US$19m, largely due to costs associated with flooding in Honduras, Chiquita Brands International yesterday (22 February) reported profits of $131.4m, or $2.92 per share. The company reported net income of $55m, or $1.33 per diluted share, for the full-year 2004.
“We had a terrific year in 2005,” said Fernando Aguirre, chairman and chief executive officer. “In fact, we realised the best annual financial results in more than a decade in spite of fourth quarter challenges of flooding in Honduras, the impact of a lower year-over-year euro-dollar exchange rate and continuing high costs for fuel and ship charters.”
Annual sales jumped 27% for fiscal 2005, reaching $3.9bn, with the majority of this increase coming from the acquisition of the Fresh Express bagged salad business. Although the company reported a loss for the fourth quarter, sales increased by 30% to $999.1m.
Looking to the future Chiquita remained cautious. Delivering the results, Aguirre spoke of the challenges that lie ahead: “The European Commission’s decision to more than double its tariff on Latin American banana imports on 1 January 2006 will result in higher costs and market uncertainty.”
The European market has long been Chiquita’s most profitable because of the price premium the company is able to charge for bananas there. Higher costs in Europe will put pressure on Chiquita profits.
“However,” Aguirre continued, “we are committed to overcoming these challenges and winning in the European market in the long-term with our clear brand leadership and excellent customer relationships. During the fourth quarter, we invested an additional $20m in consumer marketing and innovation spending in Europe to reinforce Chiquita’s brand premium in advance of the tariff change.”
Chiquita said that another priority for 2006 is to restore profitability in its North American operations. This, Aguirre indicated, will most likely be achieved through cost-cutting schemes while the company is committed to taking any opportunities additional revenue.
The company today (23 February) announced that it had entered into a new agreement with Core-Mark International, one of North America’s largest distributors to the convenience industry, to provide Chiquita bananas to convenience stores throughout the Core-Mark network.
“This arrangement is a good example of how we are executing our strategy to better meet consumer needs for convenient, healthy and great-tasting food,” said Aguirre. “Premium single-serve Chiquita bananas meet the consumer’s desire for quality and freshness in the convenience store channel. Retailers benefit by being able to offer ready-to-eat healthy snacks with better margins and a longer shelf life. Chiquita benefits because C-store sales provide incremental profitable growth.”