Dole's stock tumbles The company warns of poor earnings because of El Nino-related problems
From staff and wire reportsShares of Dole Food Co. lost more than 12 percent of their value today after the company said it expects it first-quarter earnings to fall by as much as half from the year-earlier level.
Dole closed at $50.25 on the New York Stock Exchange, down $6.87 from yesterday. Volume was much heavier than usual with 2.6 million shares changing hands today, compared with a daily average of 175,244 for the past six months.
Dole, a worldwide food grower and distributor that was founded in Hawaii in the middle of the last century, said banana prices in North America are down because of high production volume in the industry.
Warm weather caused by the El Nino phenomenon brought increased production by banana growers in Central America, flooding the U.S. market, Dole said.
March is usually a strong period for banana demand, the company said, but the price decline continued into this month.
The company's international revenues are also being hurt by the weakening of currency markets, particularly in Japan, the company said.
Dole said its market outlook for the second quarter and the rest of the year is better because heavy rains in Ecuador and adverse conditions in Colombia, both resulting from El Nino, will reduce banana production from those countries.
In the first quarter of last year, Dole had a profit of $42 million, or 70 cents a share, a 40 percent surge from $30 million, or 50 cents a share, in the 1996 first quarter.
Dole, which is still a major pineapple grower in Hawaii and has other agricultural interests in the islands, is based in Westlake Village, Calif.
The company said its California vegetables business continues to exceed expectations, despite some interruptions caused by heavy rains and its value-added salad business continues to be strong. Dole said its other businesses are on track.
Star-Bulletin reporter Russ Lynch and Bloomberg News contributed to this report.
