The fourth quarter of 2010 was rough on the banana market, but leaders of Chiquita and Del Monte remain optimistic for a turnaround in 2011.
Both banana giants released fourth-quarter financial reports in early March that showed losses primarily blamed on weak markets and weather problems.
Cincinnati-based Chiquita Brands International Inc. reported a worse-than-expected $20 million fourth-quarter loss, as European banana markets remained weak and unusually cold weather hurt crops in Arizona and Latin American, leading to shortages.
Fernando Aguirre, Chiquitaâs chief executive officer, said 2010 was âone of the most difficult operating environments in Europe in decades,â in a March 2 statement announcing the companyâs quarterly results.
Additionally, the magnitude of sudden banana industry supply shortages and related cost increases caused by adverse weather conditions âwas much greater than anticipated,â Aguirre said. But he said global banana pricing began to improve early this year, which should lead to stronger results for 2011.
Coral Gables, Fla.-based Fresh Del Monte Produce Inc. posted a $9.6 million fourth-quarter loss, citing weak banana prices, floods that hurt crops in Guatemala and the company exited operations in Brazil, South Africa and the Philippines.
While Fresh Del Monteâs banana sales volume rose 4% during the quarter, lower prices in Asia and the Middle East led to a loss in the business, the company said in a March 1 statement. Global banana prices fell 2%, to $12.77 per 40-pound box, the company said.
During a March 1 conference call with analysts, Mohammad Abu-Ghazaleh, Fresh Del Monteâs CEO, said he expects market conditions to improve this year.
Banana pricing âwas tremendously weak in Europe and Asia throughout the year,â Abu-Ghazaleh said during the call, which followed the release of quarterly results.
âIâm very confident in our future. Iâm very optimistic for 2011,â he said.
Net sales for Fresh Del Monteâs banana business rose 2.5% to $395.3 million during the three months ending Dec. 31. But the business posted a loss of $10.7 million, compared with a gross profit of $3.7 million a year earlier.
Bananas accounted for 44% of Fresh Del Monteâs total sales last year.
Chiquitaâs banana sales fell 15% during the fourth quarter, to $438 million, compared with the same period in 2009, as European and Mediterranean volumes decreased. Additionally, cool weather in Latin America led to a delayed harvest, the company said.
As Chiquitaâs growing operations suffered, supply costs escalated âdramaticallyâ as the company was forced to buy more fruit on the spot market, Aguirre said.
Chiquitaâs net fourth-quarterly loss of $20 million compares to a loss of $27 million for the same quarter a year earlier, the company said. Net sales fell 12% to $773 million. For all of 2010, Chiquitaâs net earnings fell 37% to $57 million as sales declined 6.9% to $3.23 billion.