Chiquita Brands International today announced regional information on banana prices and volume for the first two months of the 2004 third quarter. The company also revised its cost-savings projections downward for 2004 and 2005 to reflect higher costs for industry offsets.
"We are pleased with the increases in banana volume we have achieved in the third quarter, especially in North America, where we have gained new business with the top 25 retailers," said Fernando Aguirre, chairman and chief executive officer. "At the same time, we realised higher pricing levels in Europe and maintained relatively stable pricing in North America."
In the company's core European markets, Chiquita's average banana prices rose by 16 per cent on a US dollar basis in the first two months of the 2004 third quarter, compared to the same period a year ago. On a local currency basis, prices in those same markets rose seven per cent year-on-year. Price comparisons for the period were favorably affected by a heat wave that depressed demand for bananas in 2003. The volume of bananas the company sold in its core European markets rose by one per cent overall in the first two months of the quarter, compared to the same period a year ago, even though volume fell 27 per cent in the 10 new EU countries, reflecting the impact of the new quota system to which they are now linked.
In the company's trading markets in other European and Mediterranean countries, Chiquita's average banana prices were up by one per cent on a US dollar basis and fell six per cent on a local currency basis from a year ago. Volume sold in these countries rose 28 per cent.
In Asia, where the company primarily operates through joint ventures, the volume of bananas the company sold in the first two months of the third quarter increased by 13 per cent from the same period a year ago as the company continued its growth in the region.
In North America, banana volume rose 8 percent in the first two months of the third quarter compared to the year-ago period. New business from several major retailers since June 1 fueled the volume increase. The company's average banana prices in North America fell 1 percent in July-August 2004 versus the same period last year.
Banana prices in Asia fell seven per cent on a US dollar basis in the first two months of the 2004 third quarter, compared to a year ago, while prices in local currency fell 11 per cent.
Chiquita has revised net cost savings expected in 2004 and 2005 to reflect various factors affecting the industry, including higher costs for fuel, paper, purchased fruit and chartered ships.
"We have made significant progress in our productivity programs," said Jay Braukman, chief financial officer. "At the same time, however, we are experiencing pressure from higher supply chain and other industry costs, which have increased sharply in recent months.
"We will continue to aggressively pursue opportunities to take costs out of our business," Braukman said. "After a thorough review, however, it's clear that much of our productivity improvements will not reach the bottom line because of these higher-than-expected offsets. As a result, we currently estimate that we will achieve net year-over-year cost-savings improvements of approximately $10 million in 2004 and a range of $10-15m in 2005.
"If the positive banana pricing and volume trends we have experienced during the last two months continue for the rest of the year, we do not anticipate that our revised cost-savings estimates will have a significant impact on our overall operating performance for 2004," Braukman concluded.
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