Chiquita Provides Interim Price & Volume Data for Q4 2007
CINCINNATI, Dec. 11 /PRNewswire-FirstCall/ — Chiquita Brands International, Inc. today reported year-over-year increases in banana prices in all markets for October-November 2007. In its Fresh Express value-added salads business, the company reported significant year-over-year volume growth in the two-month period, while net revenue per case rose slightly.
“We are pleased that banana pricing remains favorable and that the U.S. value-added salads category is rebounding from slow growth a year ago,” said Fernando Aguirre, chairman and chief executive officer. “At the same time, rising industry costs, particularly from fuel and purchased raw products, continue to pressure our margins. This is one of the reasons why we recently restructured our business to improve profitability by consolidating our operations and simplifying our overhead structure, which is expected to generate sustainable cost reductions of approximately $60-$80 million annually beginning in 2008.” The company has previously noted that it is experiencing significantly higher industry costs from items such as fuel, purchased raw product, paper and ship charters, and that this trend is expected to continue through the balance of the year and into 2008.
Banana Segment Year-over-Year Percentage Change (1) October-November 2007 vs. October-November 2006 % of Total CHIQUITA BANANAS Pricing Volume (2) Volume Sold North America +8 % +1 % 43 % Core European Markets (3) U.S. dollar basis (4) +22 % -7 % 36 % Local currency basis +8 % Asia Pacific and the Middle East (5) +4 % -9 % 13 % Trading Markets +2 % -57 % 8 % (1) These statistics may not be indicative of future results. (2) Total volume sold includes all banana varieties, such as Chiquita to Go, Chiquita minis, organic bananas and plantains. (3) The company’s “core” European markets include the member states of the European Union (except entrants Romania and Bulgaria, which are reported in “trading” markets), Switzerland, Norway and Iceland. (4) Prices on a U.S. dollar basis do not include the impact of hedging. (5) In this region, the company primarily operates through joint ventures, and most business is invoiced in U.S. dollars.
North American banana pricing was up 8 percent year-over-year, reflecting increases in base contract prices and higher year-on-year surcharges linked to a third-party fuel price index. Banana volume sold in the region rose 1 percent.
Banana prices in the company’s core European markets were up 8 percent year-on-year on a local currency basis (up 22 percent on a U.S. dollar basis), reflecting favorable comparisons to the year-ago quarter when the market had excess supply. Volume sold in the core European markets was down 7 percent year-over-year, due to the company’s strategy to maintain its price premium and not pursue volume at unfavorable margins. While Hurricane Dean temporarily disrupted supply into the market beginning in late August, these volumes have been largely replaced by strong growth from Ecuador and shifts in industry volumes from Russian and Mediterranean markets into core European markets. As a result, local pricing in this market was roughly flat in November, after significant increases in October.
In Asia Pacific and the Middle East, pricing rose 4 percent year-on-year on a U.S. dollar basis, while volume fell by 9 percent year-over-year, primarily as a result of continuing supply constraints in the Philippines due to lower yields of premium-quality fruit.
In the company’s trading markets, which consist primarily of European and Mediterranean countries that do not belong to the European Union, pricing rose 2 percent year-over-year, while the company’s volume in this region declined 57 percent, reflecting favorable comparisons to the year-ago quarter when the market was oversupplied.
Salads and Healthy Snacks Segment Year-over-Year Percentage Change (1) October-November 2007 vs. October-November 2006 FRESH EXPRESS RETAIL VALUE-ADDED SALADS Net Revenue Per Case Volume North America 1 % +11 % (1) These statistics may not be indicative of future results.
In the Salads and Healthy Snacks segment, the company maintained relatively stable net revenue per case. In addition, its volume of retail value-added salads was up 11 percent year-over-year in the two-month period, which reflects continuing recovery in the value-added salads category. The year-over-year change in future periods is expected to moderate as the category moves beyond the anniversary of the industry E. coli outbreak of September 2006.
About Chiquita Brands International, Inc.
With annual revenues of approximately $4.5 billion, Chiquita Brands International, Inc. is a leading international marketer and distributor of high-quality fresh and value-added food products – from energy- rich bananas and other fruits to nutritious blends of convenient green salads. The company’s products and services are designed to win the hearts and smiles of the world’s consumers by helping them enjoy healthy fresh foods. The company markets its products under the Chiquita(R) and Fresh Express(R) premium brands and other related trademarks. Chiquita employs approximately 25,000 people operating in more than 70 countries worldwide. For more information, please visit our web site at http://www.chiquita.com/.
This press release contains certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Chiquita, including the ability of the company to successfully implement the restructuring described above and achieve the anticipated cost savings and other benefits; the continuing impact of the 2006 conversion to a tariff-only banana import regime in the European Union; weather conditions; industry and competitive conditions; changes in financing markets; product recalls affecting the industry and consumer confidence in the company’s products; the customary risks experienced by global food companies, such as the impact of product and commodity prices, food safety, currency exchange rate fluctuations, government regulations, labor relations, taxes, crop risks, political instability and terrorism; and the outcome of pending claims and governmental investigations involving the company.
Any forward-looking statements made in this press release speak as of the date made and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and the company undertakes no obligation to update any such statements. Additional information on factors that could influence Chiquita’s financial results is included in its SEC filings, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Chiquita Brands International, Inc.
CONTACT: Michael Mitchell of Chiquita Brands International, Inc.,+1-513-784-8959, mmitchell@chiquita.com
Web site: http://www.chiquita.com/