Weeks Later, Chiquita Not so Optimistic
Less than a month ago Chiquita Brands International Chairman and CEO Fernando Aguirre sounded an upbeat note during a conference call with analysts.
"While we certainly have more work to do," he said, "we are very proud of where the company stands today." The company, he declared, was "well positioned to take full advantage of the opportunities that lie ahead."
On Monday, though, just 25 days after that pronouncement, Chiquita issued a forecast for the third quarter that the Associated Press described as "bleak."
Costs continue to soar, and Chiquita's pricing power isn't what executives hoped it would be. Increased prices of bananas have helped, but sales are flat or falling, particularly in Europe, where onerous tariffs are stifling the company's hopes to boost shipments
Last fall, Chiquita announced a restructuring and a cost-cutting campaign that involved stripping layers of management, closing facilities and cutting production jobs. But the costs savings so far haven't been enough to make up for soaring prices of fertilizer and fuel.
On top of all that, bad weather in Central America has cut into both volume and quantity of bananas. Consumers might be willing to pay more for bananas, but not when they taste bland and woody.
The company is focusing more on its core fruits and produce in order to serve increasingly health-conscious consumers, which Mr. Aguirre has called "a huge growth opportunity." Its bagged-salads business, for example, has rebounded from a 2006 E. coli scare, when the entire category suffered after a competitor's products were found to be tainted.
The company said it will post a "significant loss" in the third quarter, but is still saying the fourth quarter will be "more normal" and is optimistic about the full year's results.
We'll see.