Chiquita Reports Fuel Driven Banana Market

NEW YORK - Jun 16/08 - SNS -- Chiquita Brands International, Inc. says there have been significant year-over-year increases in banana prices in all markets for April-May 2008 on flat and lower volumes in North America and Europe, respectively.

"We are pleased that banana pricing remains favorable as we continue working to offset higher industry costs," said Fernando Aguirre, chairman and chief executive officer. "At the same time, banana volumes remain flat to down, reflecting industry-wide supply constraints due to a series of adverse weather conditions throughout Central America and Ecuador that have substantially raised the cost of sourcing high-quality fruit. These higher sourcing costs, along with significant increases in industry and other product supply costs, continue to impact our results."

Since its last update in May, the company's estimate of year-on-year industry and other product supply cost increases in 2008 has risen by a total of $60 to $65 million, principally due to market fuel prices, purchased raw products (primarily bananas and lettuce), and market fertilizer prices.

The company's new estimate of such full-year cost increases now totals $240 to $265 million, including an estimated $30 million benefit from internal cost savings initiatives but excluding fuel hedging gains. The company's fuel hedging portfolio would generate an estimated $42 million in gains during 2008, based on current market forward rates, compared to $30 million estimated earlier.

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