Chiquita Brands International (NYSE:CQB) is a leading marketer and distributor of bananas and other produce. Chiquita is the No. 1 seller of bananas in the European Union and the No. 2 seller of bananas in North America.  Under the brand name Fresh Express, Chiquita is the largest seller of packaged salads in North America. 
In 2009, Chiquita generated $90 million of net income compared to a net loss of $329 million in 2008. The significant increase in earnings was primarily due to sustainable improvements in its North American salad operations and lower borrowing costs.
As a supplier of produce, Chiquita has benefited from lower tariffs on produce shipped from Central and South America to the European Union. Future easing of tariff regulations could further increase Chiquita's sales in Europe. On the other hand, Chiquita is adversely affected by flooding and poor weather in Central and South America where most of its produce is grown.
Chiquita owns and operates farms in North, Central, and South America and distributes produce in 80 countries. Bananas constitute the bulk of Chiquita's business, making up 60% of 2009 sales. Approximately one-third of Chiquita's bananas are produced from company owned farms while the remaining bananas and other produce are bought from third-party suppliers from around the world.  Chiquita markets its products under the Chiquita and Fresh Express premium brands. Chiquita’s revenue comes from the sale of bananas, bagged salads, other produce and healthy snacks.
First Quarter 2010 Results
For the first quarter 2010, Chiquita reported a loss from continuing operations of $4 million, or ($0.09) per diluted share, versus income of $22 million, or $0.49 per diluted share, in 2009. On a GAAP basis, the company reported a loss from continuing operations of $6 million, or ($0.13) per diluted share, versus income of $23 million, or $0.51 per diluted share, in 2009. Net sales were $808 million, 4 percent lower than the prior year period. European banana demand and pricing were negatively impacted by the harshest winter weather in 30 years and depressed economic conditions which have affected commerce across Europe.
Chiquita divides it sales into three segments: Bananas, Salads and Healthy Snacks, and Other Produce.
The Banana segment includes the sourcing (purchase and production), transportation, marketing and distribution of bananas.
In 2009, operating income in Chiquita's Banana segment declined from 2008, but remained significantly improved from 2007, as North American price increases implemented in 2008 were sustained despite a significant decline in fuel surcharges. Banana segment net sales were $2.1 billion in 2009 and 2008. In 2009, higher local European banana pricing and higher pricing in North America, where price increases from prior periods were sustained, were partially offset by lower average European exchange rates and volumes in the U.K.
The Salads and Healthy Snacks segment includes ready-to-eat, packaged salads, referred to in the industry as “value-added salads”; fresh vegetable and fruit ingredients used in food service; processed fruit ingredient products; and healthy snacking products, including Chiquita's fresh fruit smoothie product, Just Fruit in a Bottle, sold in Europe.
Salads and Healthy Snacks segment net sales decreased 13% to $1.1 billion in 2009, compared to $1.3 billion in 2008. The decline in sales primarily resulted from reductions in food service volume in North America due to discontinuing products and contracts that were not sufficiently profitable. The Salads and Healthy Snacks segment had operating income of $60 million in 2009, compared to an operating loss of $400 million in 2008.
The Other Produce segment includes the sourcing, marketing and distribution of whole fresh fruits and vegetables other than bananas.
Other Produce segment net sales increased to $253 million in 2009, compared to $244 million in 2008. The decrease was due primarily to the elimination of both local sales from previously owned operations in Chile and lower-margin sales of Mexican-sourced vegetables. In the Other Produce segment, operating income decreased to $6 million in 2009 compared to $10 million in 2008 due to lower margins and volume on certain produce items, such as melons and grapes.
Since 2006, bananas imported into the European Union from Latin America, Chiquita's primary source of fruit, have been subject to a tariff of €176 per metric ton. Banana imports from African, Caribbean and Pacific sources are allowed to enter the EU tariff-free (since January 2008, in unlimited quantities). Following several successful legal challenges to this EU import arrangement in the World Trade Organization, the EU and 11 Latin American countries initialed the WTO “Geneva Agreement on Trade in Bananas” in December 2009, under which the EU agreed to reduce its tariff on Latin American bananas in stages, starting with a new rate of €148 per metric ton in 2010 and ending with a rate of €114 per metric ton by 2017 or, at the latest, 2019. That same day, the EU also initialed a WTO agreement with the United States, under which it agreed not to reinstate WTO-illegal tariff quotas, quotas, or licenses on banana imports. Reductions in tariffs on bananas imported to Europe will lower the retail price of bananas in Europe, boosting sales. Further reductions in tariffs will lead to higher sales and profitability for Chiquita.
Like all fresh produce traders, Chiquita’s core business is vulnerable to weather conditions, crop disease, pests, and other natural conditions. The factors can lower sales volume, increase expenditures for replanting and replacing damaged crops, and limit availability to supply customers. 
Crop Diseases in Bananas
In the past, disease has devestated banana crops. In the Ulua Valley of Honduras, 30,000 hectares were lost between 1940 and 1960 due to plant disease. Because it cost between $2,000 and $5,000 to establish a hectare of plantation at the time, direct losses during the reached many millions of dollars. 
Floods and hurricanes in Central America and other growing areas can disrupt crop production.  In 2005 the company reported that 5200 acres of banana farms were hit by heavy rains from tropical storms putting them out of production for more than a year. This resulted in a loss of $13 to $18 million dollars.  The company reported that Hurricane Katrina damaged produce for Fresh Express by $2 million. 
In 2009, Chiquita incurred $25 million of incremental costs related to farm flooding in the fourth quarter of 2008, requiring the company to purchase replacement banana volume at higher costs and incurring additional fixed costs that were not recovered. In 2008, Chiquita incurred $8 million of similar related incremental costs. Flooding and other environmental conditions have the potential to adversely affect Chiquita's production.
Food safety issues that implicate consumer confidence in safety and quality of produce and ingredients adversely affect the sales of products. According to company annual reports in 2006 and 2007, and E. Coli outbreak in 2006 resulted in a lack of consumer confidence in packaged salads.  The company reported safety concerns resulted in net losses of $9 million in 2006 and continued to negatively affect sales in 2007. 
Bananas are distributed and marketed internationally in a highly competitive environment. Although smaller companies, including growers’ cooperatives, are a competitive factor, Chiquita’s primary competitors are a limited number of other international banana importers and exporters, principally Dole Food Company, Inc., Fresh Del Monte Produce, Inc. and Fyffes plc. .
Fresh Express competes with Dole Food Company, Ready Pac Produce, and Earthbound Farms in the value-added salad and packaged vegetable market. .There are also a growing number of processed food and other food and produce sellers who could enter the value-added salads category and other healthy snack markets. Approximately 30% of the Salads and Healthy Snacks segment net sales are to chain and quick service restaurants, which are characterized by a high volume of sales, but with profit margins that are lower than for retail customers. .The foodservice competition is predominately national, regional and local processors. .