Chiquita opts against relocation to focus on business challenges
Cincinnati, Ohio, in order to focus on its major business
priorities, said the company's chairman in an internal announcement
last week.
The fruit giant had been considering a move either to the Atlanta area or the South Florida area, as the lease of its current location draws to a close next year.
"We took the opportunity to evaluate our options and try to determine where the best long-term location would be for us," said the company's communications director Michael Mitchell.
"We decided to remain in our current location in order to avoid the potential disruptions a move might entail, at a time when we need a clear focus on our three main current business priorities," he added.
These are to remain focused on the successful integration of Fresh Express, a packaged salad business acquired in June, to focus on continuing improvement of profitability in the North American market and to cope with any potential changes to the European banana import regime, he explained.
The company remains embroiled in a bitter banana war with the European Union, a dispute now being mediated by the WTO. The firm is opposed to the bloc's proposal to replace its current system of licenses and quotas with a duty that will be placed on bananas imported from Latin America, while not affecting imports from the ACP countries (Africa, Caribbean, and Pacific).
The Commission's latest proposal, which comes after the WTO's rejection of two previous proposals, is the increase of import tariffs on Latin American bananas from €75 ($90) to €176($212).
"If this is implemented, it would have a very negative impact on our company," said Mitchell.
Chiquita also announced last week that it is to close processing facilities in Manteno, Illinois and Kansas City, Missouri by February 2006.
The move, part of the company's previously announced integration plan, is expected to "eliminate redundancies in fresh-cut fruit processing capacity in the Midwestern United States, improve plant utilization and reduce costs," said the company in a statement.
The integration plan aims to achieve $20 million in annual cost synergies within three years after the Fresh Express acquisition.
Last month the company posted modest improved net income of $0.3 million for the third quarter 2005, following a net loss of $20 million in the same period a year ago.
Net sales were $954 million, up 44 per cent from $662 million in the third quarter 2004. Operating income was $20 million, compared to $10 million in the year-ago period, primarily due to the acquisition of Fresh Express.
