Dole posts stronger profit, but issues warning on Europe

07/29/2011 09:29:00 AM
Dan Gailbraith

Dole Food Co. said quarterly profit nearly doubled on stronger global fruit markets and higher vegetable and packaged food sales, though the company warned that renewed weakness in Europe’s banana markets likely will pressure results during the current quarter.

“Europe is weaker than we’d like to see,” Dole’s chief executive officer David DeLorenzo said during a July 28 conference call with analysts following the release of second-quarter results. The weakness partly reflects slower fruit sales following an E. coli outbreak in Germany over the spring, he said.

Dole’s statements indicate multinational fruit and vegetable companies haven’t completely shaken off the European market problems that burdened profits for much of 2010. Other companies, such as Chiquita Brands International Inc., also came under pressure as excess supplies, cold weather and a soft economy led to weakness in Europe.

DeLorenzo said global banana supplies have returned closer to normal levels after storms and floods hurt crops in Latin America last year.

“Assuming there’s been no more weather problems, it should be a normal year,” DeLorenzo said during the call. “The industry has been very flat in terms of production and acreage for several years now. There’s certainly no push on the supply side.”

Bananas are the world’s most exported fresh fruit in terms of volume and value, according to the United Nations.

During June, European Union banana prices averaged $1,186 per metric ton, down 6.6% from May and the second consecutive monthly decline, according to World Bank data. June prices were still up from an average of $1,029 during the second quarter of 2010. North American prices also fell in June, averaging $976 per metric ton, down 3.5%.

Westlake Village, Calif..-based Dole still benefited from rising prices and sales volumes in North America and Asia, the company said. Revenue in fresh fruit, Dole’s largest business, rose 12% to $1.37 billion during the quarter, according to a company statement: http://bit.ly/nPY2BI.

Fresh vegetables revenue rose 3.4%, to $279 million, and packaged foods revenue rose 9.2%, to $272 million, Dole said.

Dole said net income from continuing operations was $86 million, or 98 cents a share, during the three months ended June 18, compared with profit of $44 million, or 50 cents, for the same period a year earlier. Total sales rose 10% to $1.92 billion.


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