Previous Statements by CQB
» Chiquita Brands International, Inc. Q1 2010 Earnings Call Transcript
» Chiquita Brands International Inc. Q3 2009 Earnings Call Transcript
» Chiquita Brands International, Inc. Q4 2008 Earnings Call Transcript
Fernando AguirreThank you Ed, and good afternoon and thank you for joining us today. We welcome the opportunity to provide more insight on our results of the second quarter of 2010, update our expectations for the year and highlight the progress we are making to strengthen our business for the long term. Turning briefly to our second quarter results, we achieved $64 million of comparable income. Overall business trends in the quarter were generally consistent with our expectations as our North American geography continued to perform well. In the second quarter, we grew the North American banana business, and in salads, we were able to sustain our recent profitability gains even as we followed our plan to increase consumer marketing activities. In Europe, while banana volume was 5% lower for the quarter, consumer demand improved sequentially to approach more normal levels. While local pricing was down by 7%, pricing strengthened late in the quarter to levels comparable to the strong 2009 period as industry supplies decreased. Combined with the execution of our business improvement plans, as expected, we were able to return to profitability during the second quarter in Europe. Looking forward, we continue to expect 2010 to be another very profitable year for Chiquita, with full year comparable income of 80 to $90 million and in a second half that is better than 2009. All this estimate is lower than our earlier expectation, approximately ¾ of the adjustments reflects the negative impact of significantly lower average European exchange rates, which in recent weeks have averaged 13% below second half 2009 levels, and which had not been previously included in our forecast. Let me provide some additional perspective on the significance of our comparable income estimates of 80 to $90 million this year. If we consider the last 10 years, 2010 will be among our best 3 years in terms of our performance; this is in large part due to the diversification strategy we have pursued that has improved the operations of our businesses to generate strong reliable cash flows. The quality of our earnings is better today and is not dependent upon one time items as it has been in recent years, in fact, let me take this one step further; the expected profitability in 2010 plus what we achieved in 2009 profits will be the best 2 years in a row of any time dating back to 1990 and 1991, almost 20 years ago.
Our overall performance continues to demonstrate that we are making progress in the diversification of our business by both category and geography, and we believe that the fundamental earnings power of our underlying business will help us make additional progress even in a continuing weak economic environment.Let me explain the rationale for our view; first as anticipated and discussed over the last earnings call, we have seen industry banana supplies begin to tighten as we move into the second half of the year, which is helping to restore the balance of supply and demand; in addition, we have altered our contracting structure to carry less surplus seasonal fruits in the second half of the year than we had in 2009. We believe, this will significantly improve our fourth quarter cost profile. Second, our business improvement plan in Europe is heading in the right direction to improve pricing, the captured cost reductions, and to increase distribution. While we recognize that we have much more work to do, we are optimistic we can achieve our goal to regain priored levels of profitability in the long term as we continue to leverage our premium brand position. Third, having completed the formation of our European joint venture with Danone, we are excited about the long term potential to grow in healthy beverages in Europe much faster and more efficiently and expect to improve profitability in a meaningful way. Both pricing in North American bananas remained stable and its achieving our profitability targets, also in our salads business we have created an operating structure for profitability that will consistently deliver results whether or not the broader category remains sluggish. Read the rest of this transcript for free on seekingalpha.com