Chiquita Brands International has recorded a 77 per cent fall in first quarter profits compared to last year.

The company recorded a net income of $20 million for the first quarter, compared to $87m this time last year.

Chiquita attributed the shortfall to a variety of factors including a $50m of higher costs associated with fuel and transportation, the continuing impact of fruit shortages following Hurricane Stan and Tropical Storm Gamma, and higher banana import tariffs in Europe.

Fernando Aguirre, Chiquita’s chairman and chief executive officer said: “We faced a variety of challenges in the first quarter, including rising industry costs for fuel and transportation expenses as the transition to the new banana import regime in the EU, where tariffs more than doubled this year.

“In addition, we incurred significantly higher sourcing costs due to the continuing effects of tropical storms in late 2005 and our decision to secure replacement fruit to meet customer needs.”

The company said it expected more supply shortfalls to continue through the second quarter, but hoped it would return to ‘normal levels’ by the middle of the year.

As part of the new EU banana import regime, Chiquita’s banana pricing rose five per cent in the first two months of 2006, partially offsetting costs incurred from the tariff increases. However, the company said prices fell by one per cent in March and eroded further in April.

“We are competing to win in this important market and remain confident that, after the dust settles, we will have strengthened our leadership position with both customers and consumers,” Aguirre said.

Chiquita did record a net sales increase of 24 per cent for the first quarter, which the company attributed to its acquisition of bagged salad-maker Fresh Express, although conceded this was partly offset by its lower banana volume in Europe and North America and unfavourable European exchange rates. Aguirre said: “We are very excited about our sustained progress at Fresh Express. We continue to expect this strategic acquisition to generate significant revenue and earnings growth and to be accretive to overall company earnings for the full-year 2006.”

Topics