Kelsey Thompson

J 452: Advanced PR Writing

Winter 2008


To the Shareholders of Chiquita Brands International Inc.,


We have ha a challenging year. It has been far from what we know we are capable of and further from what we know you expect from our company. Due to many conditions that were beyond our own control, and some that were completely unexpected, we faced many challenges that prevented us from excelling in 2006. However, what you do know and expect from our company is that we are resilient. Although we have had to learn many new lessons this past year, we paid attention to every one of them and made plans to help prepare us for this ever-changing world. We know we have reason to look forward to a promising future.


Summary of financial numbers:


As I mentioned, some things that were beyond our control were significant reasons in our results for 2006. One of the major factors was higher industry costs. It is expected that operating costs increase. However, it is harmful when large increases happen in numerous areas of operation. With raised prices of key components to our operations, we had to eat the costs to continue doing business. We saw higher prices for fuel, paper, shipping, packaging, and even fruit production itself. We understand that we need all of these things to continue to operate so we have made plans to help with these increases. We’ve spent time planning on how to cut costs or at least prepare for continual increases in each of these areas. We are finding less expensive ways to ship our products and looking for alternative packaging methods.


As an international business, we are also susceptible to changing government policies. Last year, the European Commission placed a high tariff on bananas shipped from Latin America to all European Union member countries. Europe is a large market for us and it was an unexpected and difficult change to deal with. However, there is hope for the situation. Several Latin American governments, specifically Ecuador, are voicing their disdain to the World Trade Organization. Their original plea for a hearing before the WTO was approved, and we are hopeful that the results of their fight will be positive in making a change in this policy.


Another major market for us is the United States. Due to breakouts of E. coli in competitors’ bagged produce products, there has been a decline in consumers’ desire to purchase such products. We are proud to be able to say that we have never had a breakout of E. coli in our products, but we understand the wariness of our consumers. That is why we have chosen to spend $2 million on research to help lower the threat of E. coli. We are not only doing this for Chiquita, we are doing it for our customers safety as well. We plan on sharing all of our findings with competitors so that we can restore confidence in consumers’ minds. Providing a healthy and safe product is our number one commitment and we will continue to operate by this in the following years.


As I stated before, we have reason to look forward to a promising future. Even though our net income decreased, our net sales soared. This is a fantastic indicator for our future. The reason for such an increase is due to our acquisition of Fresh Express. It has been highly successful for us and we plan to continue to expand its potential. Last year alone, Fresh Express raised an additional $1.1 billion in revenue.


We have learned important lessons this past year, and with them in mind we have turned our plans to the future. We have laid out a framework that will help keep us competitive. Our first focus will be on delivering innovative, profitable products. We want to develop our company from commodity products to profitable products. We began pursuing this in 2006, and found it to be a quickly growing part of our business. We plan on continuing expanding this in 2007. Illustrations of our commitment to this are our new products that offer consumers more value to their purchase. For example we now make Chiquita Apple Bites, which are perfect for including in lunchboxes or as an after-school snack. Last year we were the number one brand of sliced apples, and we look forward to developing our other products to this level.


Our second focus is on building a more efficient business. We are finding ways to lower our operating costs and increase our efficiency. By doing this we will be able to put more into projects that will support our first focus. We are looking into ways to change the way we ship, to lower the overall cost of it. We have made strides toward this in 2006. We were able to save $23 million in net cost because of the efficiencies in our supply chain.


In closing, although 2006 was a challenging year, we know we have reason to look forward to 2007. We believe through the challenges we are transitioning into a better company. We know there will be future years of progress because of the changes we are making today. On behalf of Chiquita, I would like to thank you, our customers, business partners, investors, and employees. Thank you for your continued trust and support. We are working hard to raise the status of Chiquita, and you are an essential part of this process.


Sincerely,


Fernando Aguirre

Chief Executive Officer of Chiquita Brands International Inc.

April 12, 2007