Charlotte-based Chiquita Brands Internationals losses more than doubled in the third quarter, as the companys sales fell and restructuring and impairment charges ate cash.
Chiquita lost $67 million during the quarter, compared with $29 million during the same quarter last year. Chiquita lost $1.45 a share. Total sales fell about 1 percent, to $714 million.
Newly appointed CEO Ed Lonergan said the results were better than expected. He pointed much of the blame for the loss at one-time items, and said the core business is improving. Executives also said much of the companys financial problems this year stem from a weak euro, which is hurting their bottom line in the European market.
Chiquitas third-quarter results exceeded our internal expectations. While it was a challenging quarter, we made progress in positioning the company for future growth by becoming more competitive in our core banana and salads businesses, Lonergan said Wednesday afternoon. The companys performance in 2012 is not indicative of the earnings potential of our business.
Chiquita is undergoing a restructuring designed to save the company more than $60 million a year. The company already has cut more than 300 positions, only about 15 of them at its Charlotte headquarters, as part of that effort. Lonergan said much of that restructuring and most of the personnel changes are complete, although the company will keep looking for ways to save money.
Wednesday also marked the first earnings announcement for Lonergan, known as a turnaround specialist. Speaking to analysts during a conference call, he publicly pledged his loyalty to the strategy hes been hired to implement.
Chiquita serves a noble purpose in the world, said Lonergan. We made some difficult but necessary decisions this year. ... I completely support decisions made in the recent past.
One-time items that clipped Chiquitas earnings included $16 million worth of restructuring charges, $28 million worth of impairment charges stemming from the companys joint venture to market fruit-based drinks in Europe with Danone, and $6 million stemming from the companys recent move to Charlotte. The company also spent $1 million during the quarter closing a research and development facility.
Sales of bananas, Chiquitas core business, fell 1.6 percent during the quarter, to $446 million. Sales of bagged salads and healthy snacks were flat, at $240 million, and sales of other produce fell 4.9 percent, to $28 million. But Lonergan said Chiquita has secured contracts with retailers next year to deliver more bananas, which he said will result in high single-digit gains for the category.
We view these wins as validation of our banana strategy, said Lonergan. He said the company also has contracts that will increase its salad sales volume in the low single digits next year.
Moving forward, Lonergan said Chiquita will continue to minimize investments in product diversification and consumer marketing as it seeks to trim costs further. The companys highest priority for excess cash will be paying down debt, Lonergan said.