Friday, September 24, 1999

Price drop in Europe costs Chiquita 200 positions

The Cincinnati Enquirer

        Chiquita Brands International is cutting 200 jobs, or about 15 percent of its work force, to offset earnings shortfalls resulting from lower banana prices in Europe.

        More than 100 positions could be eliminated at Chiquita's downtown Cincinnati headquarters as a result of the cutbacks, which will occur during the next several months through voluntary retirements and firings, company officials said Thursday.

        “Employment reductions are always difficult, but we believe these changes are imperative to reduce costs,” said Steven G. Warshaw, Chiquita's president and chief operating officer. “We are taking all necessary measures to ensure that Chiquita maximizes its opportunity for profitable growth.”

        Chiquita said it will eliminate jobs and streamline corporate and staff functions in the United States, Latin America and Europe. The move will result in a pretax charge of $6 million, or 9 cents a share, in the third quarter.

        No banana-farm workers

        will be affected by the cuts, the company said.

        The cutbacks follow disappointing results in the second quarter for Chiquita — one of the world's three largest banana producers, including Dole Food Co. and Fresh Del Monte Produce Inc.

        Chiquita, which also produces and distributes other fruits, vegetables and processed foods, reported second-quarter net income of $7 million, or 5 cents a share. That is compared with net earnings of $53 million, or 66 cents a share, last year.

        Sales dropped $67 million to $677 million primarily as a result of lower banana prices in Europe, Chiquita said.

        Falling banana prices can be traced to U.S. banana producers' long-standing dispute with the Euro pean Union, which issues the import licenses necessary to bring bananas into the country.

        In April, the World Trade Organization ruled the EU's import rules were biased against banana imports from Latin America, where the major U.S. producers grow most of their banana crops.

        The trade organization authorized $191 million in U.S. trade sanctions on European goods.

        The EU responded by issuing more banana-import licenses, creating a banana surplus in Europe. The result: Banana prices have dropped.

        “The banana-price environment is pretty tough right now,” said Jeffery Kanter, an analyst who follows Chiquita for Prudential Securities in New York. “Any moves to lower your cost structure are not a negative.”


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