Major fresh produce group Chiquita Brands has reported a fall in full-year and fourth-quarter results for 2010 following a banana trading year that company chief executive Fernando Aguirre described as “one of the most difficult in decades”.
In its newly-released financial results, the US-based company has revealed that annual sales for 2010 decreased by 7 per cent year-on-year to U$3.2bn, while comparable income for the year fell to US$36m from US$103m in 2009.
Chiquita said the drop in sales and income was primarily a result of less salad volume, decreased average European exchange rates and, perhaps most significantly, lower banana pricing and volumes in Europe.
Within the banana segment itself, the multinational’s net sales dropped by 7 per cent to US$1.9bn, while comparable operating income fell from US$171m in 2009 to US$81m.
A similar picture was seen in Chiquita’s fourth quarter results for the year, where total sales decreased by 12 per cent to US$773m, a result again blamed partly on lower average exchange rates in Europe.
Banana sales also struggled in the quarter, falling by 15 per cent to US$483m, while net sales in the company’s salads and healthy snacks segment dropped to US$230m – a fall of 12 per cent compared with the same quarter of 2009.
In a statement, Chiquita chairman and chief executive Fernando Aguirre said: “This was a challenging year and one of the most difficult operating environments in Europe in decades.
“During the fourth quarter, the magnitude of sudden banana industry supply shortages and related cost increases caused by adverse weather conditions was much greater than anticipated.”
But although Mr Aguirre said that Chiquita anticipated better banana pricing and a significant operating profit improvement for 2011, the company admitted a “weak consumer environment” and commodity cost pressures were expected to temper margins.
In the banana sector in particular, Chiquita said that supplies had “significantly tightened” in Latin America and the Caribbean due to adverse weather conditions, with the situation expected to continue until the second half of 2011.
However, although the company said tight banana supplies had resulted in significantly improved banana pricing in recent weeks, particularly in Europe, it revealed that sourcing costs had increased rapidly and were expected to significantly reduce the net pricing benefit.
In particular, the company said that market fruit costs in Ecuador, where the company sources as much as a quarter of its fruit early in the year, had been at historically elevated levels.
Similarly, Chiquita said salad sourcing sourcing across the industry had been adversely affected during the first quarter by lower yields and higher costs due to severe weather and freezes in Arizona and the Sclerotinia fungus affecting Iceberg lettuce.
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