Chiquita takes Express lane to growth
Mixtures. Blends. It’s certainly not a new concept to any fresh-cut salad processor. Nor is it new to Fresh Express’ parentChiquita Brands International Inc., Cincinnati, which reported mixed results for the fiscal year ended December 31, 2008.
Chiquita said full year net sales rose by 4 percent to $3.6 billion while it reported a loss from continuing operations of $325 million, or $7.43 per diluted share, versus a loss of $46 million or $1.14 per diluted share in 2007. On a comparable basis, however, the company reported income from continuing operations of $49 million versus a loss of $7 million in 2007.
“We overcame unprecedented cost challenges in 2008 and significantly improved full-year results versus 2007,” said Fernando Aguirre, chairman and CEO. “We sold non-strategic assets, strengthened our financial position, reduced controllable costs, extended our geographic growth and continued positioning for long-term success.”Aguirre added, “Our fourth-quarter results were lower year-over-year due to higher costs including flood impacts, a weaker euro and lower performance in salads. We took a non-cash goodwill impairment charge for Fresh Express in the fourth quarter, primarily due to current economic conditions and lower category growth expectations. Although the economic environment is uncertain, we expect to improve full-year results in 2009 on a comparable basis. We believe we have the right products and strategy to leverage global health and wellness trends and are executing our profit improvement plans in salads, maintaining our focus profitability in bananas and innovating toward higher-margin products.”
Specifically, Chiquita’s Salads and Healthy Snacks unit (including Fresh Express) reported an annual sales increase of 2.2 percent to $1.30 billion from $1.27 billion the previous year. Fresh Express sales unit volume, as measured in 12-count cases, rose 0.8 percent to $66.1 million from $65.6 million a year before. Meanwhile, Salads and Healthy Snacks reported a full-year operating income loss of $24.5 million compared to $13.2 million earlier.
Chiquita’s profit improvement plans in salads “focus on increasing pricing, eliminating unprofitable contracts and products, modifying pricing to recover fuel-related cost increases, improving the efficiency of its manufacturing and distribution network, and improving merchandising,” Aguirre noted. “As part of these initiatives, the company elected not to renew certain foodservice contracts with customers unwilling to accept certain price increases. As a result, the company expects that its foodservice volume could decline by a much 50 percent in 2009.”
Elsewhere, Chiquita’s retail business is positioned for growth. Addressing analysts last May, Tanios Viviani, chief marketing officer and president of global innovation and emerging markets, said a global R&D and innovation team will concentrate on just two brands, Chiquita and Fresh Express, and pursue four global growth platforms: bananas, healthy snacking, fresh meals and healthy beverages.
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