Shares of Chiquita Brands International Inc. (CQB) are down 30 percent Wednesday after the fruit and vegetable distributor's adjusted earnings for the first quarter trailed analysts' estimates.
On Tuesday, the company reported a net loss for the quarter on lower revenues, primarily due to lower banana prices in major markets.
Net sales of bananas, which represents a major portion of Chiquita's revenue, declined 3 percent in the quarter to $520 million. The decline in sales reflected lower dollar-equivalent pricing in Europe and lower pricing in North America.
Cincinnati, Ohio-based Chiquita noted that tight banana supply in Europe helped improve local pricing sequentially during the quarter. But this was not enough to overcome the impact of higher fuel costs and lower European exchange rates. Constrained supply availability also hampered the company's expected sales volumes.
Meanwhile, net sales of salads and healthy snacks in the quarter were flat with the prior-year period at $238 million.
Fernando Aguirre, chief executive officer of Chiquita Brands said, "Our first quarter results were impacted by near-term challenges in our business. In Bananas, lower prices in each of our markets impacted both our revenues and comparable income for the quarter."
Chiquita's net loss for the first quarter was $11 million or $0.24 per share, compared to net income of $24 million or $0.52 per share in the year-ago period.
The latest quarter's results includes $11 million in charges related to previously announced shipping reconfigurations in Europe, relocation of the company's headquarters and other exit activities.
Excluding items, comparable income for the quarter was $2 million or $0.04 per share, down from $26 million or $0.57 per share in the prior-year period.
On average, analysts polled by Thomson Reuters expected the company to earn $0.32 per share for the quarter. Analysts estimates typically exclude special items.
Net sales for the quarter declined 4 percent to $793 million from $824 million in the same period last year.
The decline in net sales was due to lower pricing in bananas, which included a force majeure surcharge in the year-ago period in North America. Lower sales were also a result of the company's exit from additional lower margin products.
Looking ahead, Chiquita said it expects 2012 to be a challenging year, but is seeking long-term sales and profitability growth by leveraging scale within its core businesses.
Chiquita noted that the North American banana business remained stable in the year. The European Banana business, although recovering, faces some significant hurdles as year-over-year comparisons through 2012 will be challenging, the company said.
Chiquita expects increased fuel costs and weaker European currency levels to have a significant impact in year-over-year results.
In Wednesday's regular session, CQB is trading at $5.55, down $2.47 or 30.80 percent on a volume of 1.33 million shares.
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