“Our second quarter results reflect sequential improvement versus the weather-impacted first quarter and versus year ago overall. We remain on path toward the long-term goals established with our ‘return to the core’ strategy despite substantial headwinds in the quarter and year to date,” said Ed Lonergan, Chiquita’s president and chief executive officer. “We realized value and volume sales increases in our banana operations, but reduced productivity, principally due to dry weather, on both owned and third-party farms in Central America resulted in higher sourcing costs and less fruit to sell in our weekly pricing markets, principally in Europe and the Mediterranean. In our retail salad segment, we delivered promised efficiency benefits from our Midwest plant consolidation and mix-driven pricing improvement in the quarter. We remain confident in our ability to grow this business profitably and expect to benefit in the second half of 2014 from the pricing and efficiency initiatives announced in May and which became effective in July.”
Lonergan continued, “We continue to make progress toward our proposed combination with Fyffes. We are confident this merger of equals unites highly complementary businesses and teams, and will enable us to improve service and reliability to customers while improving the efficiency of our operations. Our shareholder meeting to approve the transaction will take place on September 17, 2014, and we expect to close the transaction by the end of the year, subject to satisfaction of previously announced closing conditions.”
Chiquita has made significant progress executing its strategy to focus on its core products and to operate a branded commodity produce business with excellence.Chiquita management believes that the company remains on glidepath to its 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:
These expectations do not include any unforeseen weather, other event risks or major currency fluctuations.
Management’s estimates of certain financial items are as follows:
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 sales, 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.
This press release contains certain statements, including in the “Outlook” section, that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.These statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Chiquita, including: the customary risks experienced by global food companies, such as prices for commodity and other inputs, currency exchange rate fluctuations, industry and competitive conditions (all of which may be more unpredictable in light of continuing uncertainty in the global economic environment), government regulations, food safety issues and product recalls affecting the company or the industry, labor relations, burdensome taxes, additional tax assessments in foreign jurisdictions, political instability and terrorism; challenges in implementing the relocation of its corporate headquarters and other North American corporate functions to Charlotte, North Carolina; challenges in implementing restructuring and leadership changes announced in August and October 2012 including its ability to achieve the cost savings and other benefits from the restructuring; unusual weather events, conditions or crop risks; continued ability to access the capital and credit markets on commercially reasonable terms and comply with the terms of its debt instruments; access to and cost of financing; the risk that any business to be combined with those of the company cannot be integrated successfully or the anticipated benefits or synergies cannot be fully realized or may take longer to realize than anticipated; and the outcome of pending litigation and governmental investigations involving the company, as well as the legal fees and other costs incurred in connection with such items.
Any forward-looking statements made in this press release speak as of the date made and are not guarantees of future performance.Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and the company undertakes no obligation to update any such statements.Additional information on factors that could influence Chiquita’s financial results is included in its SEC filings, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Registration Statements on Form S-4.
This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the proposed combination of Chiquita and Fyffes plc, a public limited company organized under the laws of Ireland (“Fyffes”) or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
No statement in this press release is intended to constitute a profit forecast or asset valuation for any period, nor should any statements be interpreted to mean that earnings or earnings per share will necessarily be greater or lesser than those for the relevant preceding financial periods for Chiquita, Fyffes or ChiquitaFyffes Limited, as appropriate. The terms “profit forecast” and “asset valuation” as used in this context shall have the meanings given to them in the Irish Takeover Panel Act 1997, Takeover Rules 2013.
The Directors of Chiquita Brands International, Inc. accept responsibility for the information contained in this announcement. To the best of their knowledge and belief (having taken all reasonable care to ensure such is the case) the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.
Any holder of 1% or more of any class of relevant securities of Chiquita Brands International, Inc. or of Fyffes plc may have disclosure obligations under Rule 8.3 of the Irish Takeover Panel Act, 1997, Takeover Rules 2013.