UPDATE 2-Recession-resistant bananas continue to aid Chiquita
* Q3 loss/shr 35 cents narrower than estimates
* Rev up 7 pct to $840 mln, beats Street
* Banana demand continues to be strong
* Moving European HQ, to incur $15-$25 mln costs
* Cuts 2008 cap ex outlook (Recasts; adds analyst, CEO comments, conference call details, background)
By Amitha Rajan
BANGALORE, Oct 30 (Reuters) - Recession-resistant bananas continue to boost the performance of banana distributor Chiquita Brands International Inc (CQB.N), which has consistently been topping market estimates for the past several quarters. [ID:nWNAB5426]
"Even with the financial turmoil, we all have to eat some of the most basic food items, and both bananas and salads are some of the most basic ones," Chief Financial Officer Jeffrey Zalla said on a conference call with analysts.
On an average, bananas are priced at about 30 cents each in the United States, making them a relatively cheap buy for consumers who are increasingly wary of spending.
Chiquita has also gained from supply constraints induced by bad weather in parts of Latin America, which have driven demand for bananas and pushed prices up -- a trend that is expected to continue.
During the third quarter, banana prices were up 33 percent in North America, while prices in Europe were flat on a local currency basis, the company said on the conference call. Sales at the banana segment grew 13 percent during the period.
"U.S. banana pricing should remain strong due to capacity constraints, better contract pricing and a much more rational competitive environment," analyst Heather Jones of BB&T Capital Markets told Reuters.
Chiquita competes with privately held Dole Food and Fresh Del Monte Produce Inc (FDP.N), which earlier this week posted a better-than-expected quarter profit, driven by consistently high prices and demand for bananas.
"In the past, the U.S. banana market has been very price competitive and it has become much more rational in the past two to three years, and the companies are now finally making money here," Jones said.
But Chiquita has not seen the same success at its salads and healthy snacks segment. Sales at this business -- the company's second-largest -- rose just 2 percent in the third quarter.
Chiquita, known for its namesake bananas and Fresh Express bagged salads, has been witnessing relatively sluggish demand for its packaged salads as thrifty consumers view them as discretionary, and Jones does not expect this trend to change soon.
Chiquita's third-quarter net loss was $5.6 million, compared with $28.2 million a year earlier. The results for the latest third quarter include a gain 22 cents per share from repurchases of senior notes.
The company repurchased a total of $91 million senior notes using proceeds from the sale of its German distribution unit.
EUROPE HQ TO MOVE
Chiquita also plans to relocate its European headquarters from Antwerp, Belgium, to Rolle, Switzerland -- a move that will affect about 100 employees in Antwerp. Chiquita has about 23,000 employees worldwide.
Of the expected one-time costs related to the relocation, about $5 million to $9 million will be recognized in the fourth quarter, and most of the remainder will be recognized in the first half of 2009, the company said.
The company also cut its capital expenditure outlook for 2008 to $50 million to $55 million, from $55 million to $65 million.
The Cincinnati, Ohio-based company's shares, which have fallen 29 percent this year, closed at $13.51 Thursday on the New York Stock Exchange. (Editing by Pratish Narayanan)
