Problems in its banana, fresh-By Russ Lynch
flower and citrus divisions
are all cited
As it has done for five of the last seven quarters, Dole Food Co. said today its earnings for the third quarter are expected to be down because of problems in its banana business.
Dole's stock fell $2.75, or 11.5 percent, to $21.25 today on the New York Stock Exchange after the company said its continuing operations are likely to break even or report a slight loss for the three months through Sept. 30.
Dole has been saying since early last year that an increase in banana-import licenses in the European Union is creating a glut of the fruit in EU countries, pushing down prices.
Before today's announcement of a probable flat profit or a loss, the average estimate of the four analysts polled by First Call Corp. was for Dole to make a profit of 13 cents a share from continuing operations in the current quarter. Dole also said today that prices were lower than expected in its cut flowers division, producing lower earnings there than had been anticipated.
Earnings also are being adversely affected by last year's citrus freeze on the mainland and by lingering costs from last year's Hurricane Mitch in Central America. However, banana prices are the main reason for the expected profit dip, Dole said.
"Pricing in Europe has been horrible," said analyst Timothy Ramey of Deutsche Banc Alex. Brown, who rates Dole a "hold."
"The company has been saying forget 1999, let's position ourselves to return to profitability in 2000."
Now the world's largest producer and marketer of fresh fruits and vegetables, Dole was founded in Hawaii in the mid-1800s and still has substantial land and agricultural operations in the state. It is among the top private landowners in Hawaii.
Bloomberg News contributed to this report.