Banana Glut Takes Toll on Dole Earnings

Dole Food Co. in Westlake Village said first-quarter earnings fell 46%, mostly because heavy rains caused large supplies of bananas and therefore lower prices.

The world’s largest marketer of fresh produce said net income fell to $22.8 million or 37 cents a diluted share, from $42 million or 70 cents a year earlier.

Dole had warned investors in March that its first-quarter earnings would fall because El Nino caused an early harvest of bananas in Central America, leading to an oversupply of the fruit in North America. That caused prices to fall, offsetting the effect of 20% higher sales of the company’s precut salads.

“It’s a shame banana prices were so down, because [Dole’s] quarter was so good otherwise,” said analyst Timothy Ramey of Deutsche Morgan Grenfell Inc., who has a “buy” rating on Dole shares.

Revenue rose 4.9% to $1.01 billion from $965 million.

“The business has improved since the first quarter, and we expect this to continue throughout 1998,” chairman David Murdock said in a statement.

In addition to El Nino, Dole said its earnings were hurt by the dollar’s strength against the Japanese yen, since the company receives some of its revenue in Japan.