Dole Will Take $20-Million Charge in the 4th Quarter

In another weather-related blow to the nation’s largest fresh fruit producer, Dole Food Co. said Monday that damage to its California citrus crop caused by last month’s severe frost will force it to take a $20-million charge in the fourth quarter.

The Westlake Village-based company said the damage will reduce 1999 operating profit by $10 million to $15 million.

The company had already said it was taking a $100-million charge in the fourth quarter after Hurricane Mitch wreaked havoc on its banana plantations in Central America. In addition, the food company watched banana exports plummet after the economic crisis hit Russia in July.

Dole said the bone-chilling temperatures that struck the state’s Central Valley between Dec. 21 and Dec. 24 destroyed 6,500 acres of crops, including lemons and navel and Valencia oranges in Kern, Tulare and Fresno counties. The damage will also force Dole to close three San Joaquin Valley packing plants and will affect hundreds of seasonal jobs there for most of 1999. Two packing plants will remain open in Southern California: Buena Ventura and Redlands.

The freeze, which industry officials said destroyed close to half the state’s citrus crop, is likely to prompt other companies to make similar announcements in coming months. Citrus losses have been estimated at $540 million, according to California Farm Bureau spokesman Bob Krauter.

Dole said it expects its citrus division to recover within a year.

“Unlike Hurricane Mitch, which caused permanent infrastructure damage, the citrus freeze’s effect will be limited to the season,” a company spokesman said. “It is very significant to us within the context of North American citrus crops, and we’re anxious to recover and get the crop back on normal footing.”

Several analysts agreed. Although they dropped their estimates for the fourth quarter, they said Dole is not likely to have a difficult recovery.

“It’ll take estimates down, but these kind of events tend to be taken in stride,” said Piper Jaffray analyst George Dahlman in Minneapolis. “It’s not in the control of the company, so we don’t penalize the company too much for it.”

Added Timothy Ramey of Deutsche Bank Securities in New York: “It’ll make 1999 a difficult year for them. It’ll take them a full year to recover from this. But aside from having sort of bad performance in bananas and citrus, everything’s still looking rosy.”

Dole is expected to lose 8 cents a share in the fourth quarter, the average estimate of five analysts surveyed by First Call Corp. The company earned $23.2 million, or 38 cents a share, on sales of $1.1 billion a year earlier.

Dole shares fell $1.50 to close at $28.50 on the New York Stock Exchange.