Dole lowers profit forecast

By Melinda Fulmer
Los Angeles Times

Greater demand for packaged produce and higher banana prices in Asia helped Dole Food Co. swing to a third-quarter profit, but shares fell yesterday 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, compared with a loss of $94.8 million, $1.70, a year earlier.

Sales rose about 4 percent,to $1.25 billion from $1.21 billion last year, as the Westlake Village, Calif.-based company sold more bagged salads and packaged fruit bowls, increased volume at its European 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, and lost just $250,000 to $500,000 rather than the $2.4 million 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 full year would be lower than expected as competition heats up in the North America banana business and the company finishes the last of cost-cutting measures and divestitures that boosted earnings 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 that acquisitions in Dole's core fruit and vegetable businesses would be "difficult to achieve," given the company's dominant market position.

Dole is in the midst of acquisition negotiations itself.

Chairman and Chief Executive David Murdock made an offer in late September to take the company private by buying the 76 percent of the company he does not own. His initial offer of $29.50 a share was rebuffed, but he and the company are still negotiating.

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