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Dole Swings to Profit in Quarter

November 07, 2002|Melinda Fulmer | Times Staff Writer

Greater demand for packaged produce and higher banana prices in Asia helped Dole Food Co. swing to a third-quarter profit, but shares fell Wednesday as the world's largest fruit and vegetable shipper warned of lower-than-expected profit in the fourth quarter.

Dole earned $14.7 million, or 26 cents a share, in the quarter ended Oct. 5, contrasted with a loss of $94.8 million, or $1.70, a year earlier.

Sales rose about 4% to $1.25 billion from $1.21 billion last year, as the Westlake Village-based company sold more bagged salads and packaged fruit bowls, increased volume at its European ripening and distribution facility and fetched higher prices for its fresh fruit, including its premium sweet pineapple.

Moreover, the company was not badly affected by the recent disruptions at West Coast ports, losing just $250,000 to $500,000, rather than the $2.4 million company officials had originally anticipated.

"The fresh-fruit business is doing well and they are beating numbers," said Eric Larson, an analyst at US Bancorp Piper Jaffray.

Net income included a 2-cent-per-share gain from Dole's sale of a Spanish citrus and vegetable producer and a French dried-fruit company, plus the recovery of a previously written-off investment in Honduras.

Excluding those gains, Dole's earnings of 24 cents a share exceeded the 21-cent estimate from analysts polled by Thomson First Call.

However, Lawrence A. Kern, Dole's president and chief operating officer, warned that the company's profit outlook for the fourth quarter and the full year will be lower than expected, as competition heats up in the banana business in North America and as the company finishes the last of the cost-cutting measures and divestitures that had boosted earnings in the last two years.

"Our challenge going forward is to grow Dole's earnings by growing market share in our core businesses through internal growth and selective acquisitions," Kern said in a statement.

But, he added, acquisitions in Dole's core fruit and vegetable businesses will be "difficult to achieve" given the company's dominant market position.

Dole itself is in the midst of acquisition negotiations. Chairman and Chief Executive David Murdock made an offer in late September to take the company private by buying the 76% of the company he doesn't already own. His initial offer of $29.50 a share was rebuffed, but Murdock and the company are still negotiating.

Analyst Larson said the company's lowered guidance shouldn't greatly affect these negotiations.

Dole forecast fourth-quarter profit at 20 cents to 24 cents a share, short of the 27 cents expected by analysts. And it said it would earn $2.65 a share for the year, which was at the low end of analysts' expectations.

The weaker outlook reflects expected lower North American prices on bananas in the fourth quarter, flattening sales of packaged lettuce and fruit as well as continued weak prices in the company's bulk vegetable business.

Dole shares dropped 37 cents to close at $28.87 on the New York Stock Exchange.

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