Chiquita struggles to face up to challenges
quarter and full year, but the firm said it expects a number of
strategic initiatives it has put in place will help it gain
momentum in 2007.
Loss for the full year settled at almost $96m, dropping sharply from last year's $131m income. According to Chiquita, its performance was hit this year by changes in the European banana market, which resulted in lower pricing and increased tariffs. Other factors impacting the company's results included higher fuel and other industry costs, as well as the accrual for potential settlement of a US Department of Justice investigation into the company. "We continue to face a challenging and evolving environment due to competitive pressures and regulatory changes in the European banana market as well as lingering consumer concerns about the safety of fresh spinach and packaged salads in the United States," said the firm's chairman and chief executive officer Fernando Aguirre."However, we believe the strategic initiatives we have put in place will effectively address these issues and gain momentum in 2007," he added. Improved banana volume in Europe and the US, as well as higher pricing in the US served to partially offset Chiquita's loss by boosting sales. Net sales for the quarter increased by 9 percent to $1.1bn. Full year net sales increased 15 percent to $4.5bn. In the firm's banana segment, which includes the sourcing, transportation, marketing and distribution of bananas, net sales for the quarter increased by 11 percent to $495m from $448m. The operating loss for the segment was $26m, compared to operating income of $5m in the prior year. Full year net sales for the segment were flat at $1.9bn. The operating loss for the segment was $21m, compared to income of $182m in 2005. In October the company announced a number of organizational changes and new appointments in a move designed to strengthen its flagging business. These included the naming of newly appointed global product leaders, a chief information officer and a new president of its Fresh North America business. The move came just weeks after Chiquita embarked on a number of debt-reducing initiatives, including the prospective sale of its shipping fleet, the suspension of its quarterly cash dividend, and requesting a temporary waiver from its lenders. These moves, Chiquita had said, were "prudent steps" to help it resurface from a challenging market environment. The firm yesterday said it is targeting $40m in gross cost savings for 2007.
