Energy Costs Whack Chiquita Profits

NEW YORK - May 4/06 - SNS -- Chiquita Brands International, Inc. reported net income of U.S. $19.5 million on sales of $1,153.7 million for the quarter ending March 31, compared to a net of $86.5 million on sales of $931.8 million during the first quarter of the previous fiscal year.

In explaining the decline, the company noted the 2006 quarterly results include $50 million of higher costs associated with fuel and transportation, the continuing impact of weather-related events that occurred in late 2005 and higher banana import tariffs in Europe.

"We faced a variety of challenges in the first quarter, including rising industry costs for fuel and transportation expenses as well as the transition to the new banana import regime in the European Union, where tariffs more than doubled this year," said Fernando Aguirre, chairman and chief executive officer.

"In addition, we incurred significantly higher sourcing costs due to the continuing effects of tropical storms in late 2005 and our decision to secure replacement fruit to meet customer needs. We expect our banana supply shortfalls versus market demands in North America to continue through the second quarter, but our supply should return to more normal levels by mid-year. We also anticipate higher industry costs, driven by higher fuel-related expenses, which we are mitigating through indexed fuel surcharge policies."

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