Chiquita Brands International, the world's top banana producer, yesterday said harsh industry conditions would lead to a much steeper fourth-quarter loss than Wall Street had expected.
Chiquita said it expected a fourth-quarter loss of between $72 million to $82 million (€71.7E81.6 million), or $1.15 to $1.30 per share, hurt by lower pricing in Europe and, on top of that, by the recent strength of the dollar against major European currencies.
Wall Street had been expecting Chiquita to lose 45 cents per share in the fourth quarter, according to market research firm First Call/Thomson Financial.
In the same period in 1998, the company lost $102 million, or $1.62 a share, including losses of $74 million, or $1.13 a share, from Hurricane Mitch, which destroyed much of Chiquita's Central American banana plantations. The company, whose Chiquita Processed Foods unit is also the top US private-label vegetable canner, also said it would suspend paying a common stock dividend next year until industry conditions improve.
Chiquita also blamed poor third-quarter results on lower pricing in Europe. The strong dollar in Europe has now compounded the pricing issue in the fourth quarter, it said.
"Weak demand in the Eastern European trading markets has added to the challenging industry conditions," Chiquita's president and chief operating officer, Mr Steven Warsaw, said in a statement. "Our strategy has been, and will continue to be, based on a very conservative approach to non-core trading markets, only marketing fruit in those areas when it can be done profitably."
"We are looking forward to an overall improvement in the European market," Mr Warsaw said. "This, coupled with continued cost reductions, should lead to significant improvement in earnings and free cash flow in 2000."
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