Dole earnings slip
By Russ Lynch
on banana woes
Star-BulletinDole Food Co. shares soared this morning after the company reported a 36 percent drop in third-quarter earnings that was in line with Wall Street expectations.
Blaming a downturn in its banana business, Dole reported a third-quarter profit of $15.6 million, or 26 cents a share, compared with $24.4 million, or 40 cents a share, in the 1997 third quarter. Revenues of $1.21 billion in the latest quarter were up 2.5 percent from $1.18 billion in the year-earlier period.
The company last month had warned its third-quarter earnings would be lower and today's results matched the recently lowered average estimate of five analysts surveyed by First Call Corp.
Dole's stock price shot up $2.31, about 7 percent, to $34.50 in heavy trading on the New York Stock Exchange today. But even at that level, the stock is about 39 percent off its 52-week high of $57.121/2 on Feb. 11.
David H. Murdock, chairman and chief executive officer, said production costs in the banana business have been driven up by the effects of the El Nino weather pattern and banana prices were driven down by the collapse of the Russian market.
The near-term outlook for the banana business is bad because of yet another weather-related problem. Hurricane Mitch has devastated Honduras, Guatemala and Nicaragua, countries that together produce 25 percent of Dole's bananas.
The company said earlier this week that it expects to take a fourth-quarter charge of $50 million to $70 million to cover hurricane losses. In the fourth quarter of last year, Dole's total profit was $23 million.
The company has said it is too soon to know what effect the hurricane damage might have on future banana prices.
Murdock said today that Dole employees are helping in the relief effort in Central America.
"Dole has been feeding approximately 20,000 people in Honduras since the disaster occurred, has made a donation of $1 million in food and other supplies, and has coordinated an international relief effort through its Gulfport, Miss., port facility," Murdock said.
Dole was founded in Hawaii in 1851 and still grows fresh pineapple, papaya and other products on 8,000 acres of Oahu land, 6,500 of which are owned by the company. It has become the world's largest producer and distributor of fresh fruits and vegetables with annual revenues of more than $4 billion and 44,000 workers worldwide.
For the first nine months, Dole earned $120.4 million, or $1.98 a share, down from $136.9 million, or $2.27 a share, a year ago. Revenue for the nine months rose to $3.39 billion from $3.25 billion a year ago.
