(Feb. 20, 3:50 p.m.) Chiquita Brands International Inc.’s shares plummeted when the company reported losses of $412 million in the fourth quarter, with consumers and foodservice customers buying fewer healthy snacks and salads from Fresh Express Inc., its Salinas, Calif.-based division.
Net sales decreased 10% in its salads and healthy snack division, mostly because of lower volumes, which were partly offset by higher pricing and fuel surcharges, the company said in its quarterly statement released Feb. 19.
Foodservice volume decreased 25% because of contract cancellations, “with customers unwilling to accept price increases,” and retail value-added salads volumes declined 4%, according to the financial report.
Chiquita reported taking a $375 million impairment charge in the fourth quarter for the Fresh Express line.
While net sales for the year for the company increased 4% to $3.6 billion, for the quarter the company recorded a loss of $411.9 million, compared with a loss of $23 million for the same quarter a year ago, the company said in its quarterly financial report.
The Cincinnati-based company’s shares dropped $5.39 on Feb. 20, ending at $7.34, a 42% decrease.
Chiquita’s banana sales increased 12%, about $2.1 billion, following a year in which decreased shipments tightened supplies and left some Costco stores without bananas on the shelves.
In its salads and healthy snacks, the company said it faced an operating loss of $25 million because of higher fuel and raw product costs, network inefficiencies and increased investments in new products.
Comparable operating loss was $14 million, compared to a loss of $2 million in the year-ago period. Among the reasons:
- higher brand development, marketing and innovation spending in North American salads (such as the expansion of innovative products);
- increases in raw product costs in salad operations; and
- increased investment in the successful expansion of Just Fruit in a Bottle in Europe.
The operating losses invested in the start-up of Just Fruit in a Bottle in Europe were $8 million for the fourth quarter of 2008.
“We overcame unprecedented cost challenges in 2008 and significantly improved comparable full-year results versus 2007,” Fernando Aguirre, chairman and chief executive officer, said in the statement.