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Chiquita cuts jobs amid tough banana market
United States
Tuesday 30 October 2007
Chiquita has outlined a sweeping cuts in a bid to save up to US$80m annually.
The changes will involve the loss of more than 160 management positions worldwide, including a 21 per cent reduction at the three highest levels. The firm said it was also simplifying its organisational structure in line with geography, rather than product line.
Chairman and CEO Fernando Aguirre said the changes were being made in response to rising industry costs, punitive EU banana import regulations and a slower-than-anticipated recovery of the value-added salads category, which was hit hard by several contamination scares earlier this year.
As a result of these changes, the company expects to generate new, sustainable cost reductions of approximately US$60-80m annually, beginning in 2008, after a one-time charge of approximately US$25m in the fourth quarter 2007 related to severance costs and certain asset write-downs.
The group claimed the savings would improve profitability, with the resulting additional cash flow being used primarily to reduce debt, consistent with the company's previously announced target to achieve a debt-to-capital ratio of 40 per cent.
"Since 2005, market dynamics and the competitive landscape have been rapidly changing, which has limited our profitability and slowed the execution of our strategy," said Fernando Aguirre, chairman and chief executive officer.
The changes will involve the loss of more than 160 management positions worldwide, including a 21 per cent reduction at the three highest levels. The firm said it was also simplifying its organisational structure in line with geography, rather than product line.
Chairman and CEO Fernando Aguirre said the changes were being made in response to rising industry costs, punitive EU banana import regulations and a slower-than-anticipated recovery of the value-added salads category, which was hit hard by several contamination scares earlier this year.
As a result of these changes, the company expects to generate new, sustainable cost reductions of approximately US$60-80m annually, beginning in 2008, after a one-time charge of approximately US$25m in the fourth quarter 2007 related to severance costs and certain asset write-downs.
The group claimed the savings would improve profitability, with the resulting additional cash flow being used primarily to reduce debt, consistent with the company's previously announced target to achieve a debt-to-capital ratio of 40 per cent.
"Since 2005, market dynamics and the competitive landscape have been rapidly changing, which has limited our profitability and slowed the execution of our strategy," said Fernando Aguirre, chairman and chief executive officer.
