Dole Food Co. reported a 57% jump in second-quarter profit, though earnings in its biggest business, fresh fruit, slumped amid higher costs and weaker banana and pineapple sales in Europe and Asia.
European banana prices are expected to ânormalizeâ during the second half of this year after sliding about 13% during the first half, compared with year-earlier levels, Dole chief executive officer David DeLorenzo said Aug. 3.
While market fundamentals have improved after a harsh winter, the global economy remains a concern, DeLorenzo said during a conference call with analysts after the release of quarterly results.
âWeâre still facing a challenging environment, especially in the European market,â DeLorenzo said. âCertainly thereâs weak demand in Europe, and Russia is weak too. Retailers seem to be concerned about the consumer.â
In Europe, banana prices during the second half of 2010 are expected to be similar to the same period in 2009, DeLorenzo said. He didnât mention specific prices.
In Doleâs fresh fruit business, earnings before interest and taxes fell to $68 million during the three months ending June 19, compared with $96 million in the same period a year earlier, the Westlake, Calif.-based company said in an Aug. 3 statement. Fresh fruit sales rose 0.2%, to $1.224 billion.
Fresh fruit accounted for more than 70% of Doleâs total revenue.
Dole joins two other large, U.S.-based fruit growers, Chiquita Brands International Inc. and Fresh Del Monte Produce Inc., taking lumps from Europeâs recent financial turmoil and a soft global economy generally.
Also Aug. 3, Fresh Del Monte said second-quarter profit fell 60%, citing weaker European sales. Last week, Chiquita said its Europe operations returned to profit the previous quarter after losing money earlier this year, but the company still cut its full-year income and sales forecasts.
Dole was more upbeat over its North American business, saying banana and fresh pineapple sales in the region increased during the second quarter. Prices and sales volumes in fresh-packed vegetables and packaged salads also rose.
The North American banana business âcontinues to do well,â DeLorenzo said during the call.
In Chicago terminal markets, bananas from Costa Rica were $18 to $19 per 40-pound carton on Aug. 3, according to U.S. Department of Agriculture data. At the end of April, prices were $15 to $16.
Doleâs overall net income rose to $33 million in the second quarter from $21 million a year earlier, helped by improved results in fresh vegetables and packaged foods, the company said today. Total sales rose 1.6% to $1.742 billion.
In fresh vegetables, sales rose 4.3%, to $269 million. In packaged foods, sales increased 6%, to $249 million.
Doleâs packaged foods portfolio âperformed well,â DeLorenzo said in the Aug. 3 statement.
âConsumers continued to embrace our new product offerings, with the rollout of our Fruit Crisps and Real Fruit Bites exceeding distribution goals.â
For a slide presentation detailing Doleâs quarterly results, go to http://bit.ly/a1OSKT.