General Information

• Full-time employees: 21,000• Products:– Chiquita Bananas– Chiquita Pineapples– Chiquita Super Crunchy Fruit Chips– Chiquita Bites– Fresh Express Salads.

CHIQUITA BRANDS’ STRUGGLES

Attempts To Move Away From Banana Association

• Frozen juice bars in 1987 – Complete failure with costs of over $30 million

• Line of exotic juices – Marginally better

• Heavy investments in ad campaigns across US and other countries– People still mostly associate brand with bananas

Banana Association Affects Profits

• Banana sales accounted for 98% of sales• 1990s when banana production in Ecuador more than

doubled increasing supply and forcing Chiquita Brands to lower their prices resulting in decreased marginal profits while debts where increasing.

• The devastation of Chiquita’s banana plantation in Honduras and Guatemala in 1988 by Hurricane Mitch costing the company $75 million in damages.

• European Union’s favoritism toward Caribbean, which diminished their European market share from 40% to 20%.

• Banana sales now account 60%

Lowest Point

• 1992 net loss of $284 million after a previous year net income of $128.5 million– (1) Poor banana quality (due to El Niño and outbreaks of

banana disease), (2) the European Union’s favoritism toward Caribbean bananas, (3) increased domestic competition, (4) heavy debt load and the resulting high interest payments.

• Restructuration: cutting jobs, sale of assets, consolidation of operations, sale of their meat division, Numar edible oils group, and closed part of their juice operations

• The company continued to lose money well into the mid-1990s

Today

• Recent change of CEO due to lengthy earnings decline. (Ed Lonergan)

• Profit fell to $6 million in the second quarter from $78 million a year earlier

• Net sales declined to $833 million from $870 million a year earlier

• Restructuring program with purpose o cutting costs and boosting margins ($60 million per year)

FINANCIALS

Financials Highlight

• Net loss of $325.089 million in 2008• Incpme declined 37.19% from 90.808 million in 2009 to $56.836

million in 2011. • Total sales revenues have been steadily declining with a -13.02%

from 2008 to 2011.• 5 year average total debt-to-equity ratio: 0.97• Current ratio: 1.6• A low return on assets (ROA) of -4.6% shows management is not

being very effective at using company assets to generate earnings.

• A low return on invested capital -7.0% shows how bad the company is at using its money to generate return.

Chiquita Brands vs. Competitors

Yahoo! Finance 2012

SWOT

Strength• Brand name• Global market leader• Goods sold in over 70

countries• Allied with rainforest

protection agencies (CSR)

Weaknesses• Poor worker relations• Numerous lawsuits• Negative publicity due to

payment of paramilitary groups• Loss on investments trying to

access European market• Poor money management

practices of the past make investors weary

• 37.19% decrease in net income from 2009 to 2011

SWOT

Opportunities• Quick snack ideas• Healthy food craze• Increased foreign investment

in Asia• Making good on improving

working conditions in Central America

• Expansion of their pre-packaged line of fruit to fast food restaurants in the US and other countries

Threats• Del Monte and Dole largest

competitors• Lawsuits for precarious working

conditions• Close out from European market

due to subsidies given to smaller suppliers

• Deceased fruit and external environmental threats

• Worker protests that could halt operations and incur substantial losses