Chiquita reports Q1 net loss of US$25M, compared to year-ago earnings of US$2M, partly due to weather conditions disrupting its value chain and market demand for company's products; net sales fall 1.6% to US$762M

CHARLOTTE, North Carolina , May 9, 2014 (press release) – GAAP net loss of $25 million in 2014 compared to GAAP net income of $2 million in 2013

Adjusted EBITDA[1] of $23 million for 2014 compared to Adjusted EBITDA of $39 million in 2013

Chiquita Brands International, Inc. (NYSE: CQB) today released financial and operating results for the first quarter 2014. The company reported GAAP net loss of $25 million in 2014 compared to GAAP net income of $2 million 2013. GAAP operating income for 2014 was $1 million compared to income of $25 million in 2013. The company also reported comparable operating income[1] of $7 million for 2014 compared to comparable operating income of $23 million for 2013.

"While we are confident in our 2014 progress toward our long term financial targets and benefits from our 'return to the core' strategic plan, our first quarter results did not meet expectations," said Ed Lonergan, Chiquita's president and chief executive officer. "Drought conditions in Central America and winter storms in North America and over the Atlantic disrupted our value chain and market demand for our products. While we grew our North American banana volume in excess of 5 percent compared to first quarter of 2013, shortfalls in contracted and owned farm supply required purchase of expensive weekly market fruit to serve our contracted business and resulted in inefficient shipping choices and short supply to our weekly market customers across countries. In salads and healthy snacks, winter weather resulted in mismatched demand versus supply in both our retail and foodservice businesses, impacting service and raw product requirements. While retail salad volume grew 5 percent compared to first quarter of 2013, our foodservice and fruit ingredient businesses volumes were substantially lower year on year due to a number of factors."

Lonergan continued, "While weather impacts are a fact in our industry, our responsibility as leaders is to mitigate these risks. In addition to bringing together two complementary businesses, we believe that the combination with Fyffes, which we announced on March 10, 2014, will fundamentally improve our ability to deal with weather risks and event-driven supply volatility in our bananas business due to the broader growing and shipping profiles of the combined entities. Last week, ChiquitaFyffes filed a registration statement with the SEC in connection with the proposed combination, and we have begun the regulatory review process in both North America and Europe. We plan to close the transaction by the end of the year and remain excited about the opportunities for the combined business. Also last week, we began implementation of efficiency and pricing actions in our salads business, supporting our long term profitability objectives for this business."

[1]Amounts exclude certain items described below under "Non-GAAP Measurements and Items Affecting Comparability."


Bananas: Comparable sales decreased less than 1 percent to $502 million primarily due to lower sales volumes and lower weekly market local prices in Europe offset by higher sales volumes in North America and positive impacts from higher euro exchange rates, including lower hedging losses. Operating income on a GAAP basis was $21 million for the quarter compared to $30 million for the first quarter of 2013. Comparable operating income decreased to $21 million in the first quarter of 2014 compared to Comparable operating income of $27 million in the same period of 2013 as a result of the requirement to purchase bananas at higher than normal weekly prices to meet contractual needs.

Salads and Healthy Snacks: Net sales decreased 4 percent to $230 million due to pricing and mix impacts in retail salads, as well as lower sales of foodservice veggie ingredients, apples, and processed fruit ingredients, partially offset by higher volume sales of retail value-added salads. Operating loss on a GAAP basis was $3 million for the quarter compared to operating income of $7 million for the first quarter of 2013. Comparable operating loss was $3 million for the first quarter of 2014 compared to a Comparable operating income of $8 million in the same period of 2013 as a result of lower sales and an incremental investment in marketing.

Cash, debt and liquidity: Cash used in operations was $8 million for the first quarter of 2014 compared to cash provided by operations of $15 million for the same period of 2013. At March 31, 2014, cash and equivalents were $27 million, and the company had $90 million of availability under its ABL facility.


Chiquita's strategy remains to focus on its core products and to operate a branded commodity produce business with excellence. The company believes the actions it has taken year to date in 2014 enhance that strategy and position the company to remain on glidepath to our long term EBIT margin targets - to achieve run-rate target EBIT margins of 4% for Bananas and 7-8% for Salads by the end of 2015.

The company's focus in the remainder of 2014 will be upon:

Closing the announced combination with Fyffes, which we expect to occur by the end of the year

Disciplined contract renewals and new business acquisitions driven by continuous quality improvements as well as service and innovation

Continued prioritization of profitability over volume in Europe, but with product expansions to include sale of a broader portfolio of banana classes and types to better serve the full requirements of our customers

Shipping partnerships and rotations that drive efficiencies

Cycling out of the substantial 2013 Midwest plant transition costs and raw material weather impacts in salads

Execution of certain salads and healthy snacks 2014 cost reduction and pricing actions

Prudent capital spending, with a focus on farm, port and plant productivity enhancements, as well as research and development spending to safeguard our operations and industry from adverse weather conditions, disease and other natural conditions

These expectations do not include any unforeseen weather, other event risks or major currency fluctuations.


Chiquita will hold a conference call for investors to discuss its results at 9:00 a.m. EDT today. Access to a live audio webcast is available at Toll-free telephone access will be available by dialing 1-877-741-4248 in the United States and +1-719-325-4826 from international locations and providing the conference code 3659683. To access the telephone replay, dial 1-888-203-1112 from the United States and +1-719-457-0820 from international locations and enter the confirmation code 3659683.

CONTACTS Steve Himes, 980-636-5636,, (Investors and Analysts)

Ed Loyd, 980-636-5145,, (Media)


The company reports its financial results in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). To provide investors with additional information regarding the company's results, more meaningful year-on-year comparisons of the company's core financial performance, and measures that management uses to evaluate the company's performance against internal budgets and targets, the company reports certain non-GAAP measures as defined by the Securities and Exchange Commission. This press release uses non-GAAP measures of comparable operating income, comparable operating margin and Adjusted EBITDA. Non-GAAP financial measures should be considered in addition to, and not instead of, U.S. GAAP financial measures, and may differ from non-GAAP measures that other companies use. The adjustments between the U.S. GAAP and non-GAAP financial measures listed below are excluded from comparable operating income because they are unusual and/or infrequent in nature and are consistent with the company's internal reporting and measurement of financial performance.

Transaction expenses: In the first quarter of 2014 the company recognized $6 million of expenses related to the proposed combination with Fyffes, which have been excluded from comparable Corporate costs.

Unrealized foreign currency hedging gain: Hedge accounting was terminated prospectively in the first quarter of 2013 for certain currency hedges that were transferred to banks participating in the company's ABL Credit Facility. These unrealized gains and losses were recognized in "Net sales" for positions originally intended to hedge sales in the second and third quarters of 2013. Termination of hedge accounting did not change the economic purpose or effect to reduce uncertainty in the U.S. dollar realization of euro-denominated sales, but did result in unrealized changes in fair value of these hedge positions to be recognized currently in "Net sales" until the hedge positions settled. In the first quarter of 2013, $3 million of unrealized gains in Net sales associated with these option contracts were excluded from the comparable results of the Bananas segment. These unrealized changes net to zero in the first nine months of 2013 because all of the affected hedge positions had settled by September 30, 2013.

Exit activities: In the first quarter of 2014, comparable operating income of the Salads and Healthy Snacks segment excludes $0.4 million write-down of non-operating assets and comparable Corporate costs exclude $0.5 million of costs related to the company's headquarters relocation to Charlotte. In the first quarter of 2013, comparable operating income of the Salads and Healthy Snacks segment excludes $1 million of severance expenses related to discontinued products.


Chiquita Brands International, Inc. (NYSE: CQB) is a leading international marketer and distributor of nutritious, high-quality fresh and value-added food products - from energy-rich bananas, blends of convenient green salads and other fruits to healthy snacking products. The company markets its healthy, fresh products under the Chiquita® and Fresh Express® premium brands and other related trademarks. With annual revenues of more than $3 billion, Chiquita employs approximately 20,000 people and has operations in nearly 70 countries worldwide. For more information, please visit the corporate web site at

Industry Intelligence Editor's Note: This press release omits select charts and/or marketing language for editorial clarity. Click here to view the full report.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.