Dole Food Co., the world's largest producer and marketer of fresh fruit, said Thursday that second-quarter earnings fell 54% and warned that depressed banana prices in Europe will push profit lower in the third quarter.
Profit from operations fell to $37.5 million, or 66 cents a share, from $82.1 million, or $1.35, a year ago. The company was expected to earn 64 cents, the average estimate of four analysts surveyed by First Call Corp. Individual estimates ranged from 60 cents to 75 cents.
Dole, based in Westlake Village, warned for the second time in three months that profit is being squeezed by an unexpected increase in the number of banana import licenses from the European Union, which is causing a surplus of bananas in EU countries and depressing prices. The EU's licensing decision came after the U.S. imposed trade sanctions against it, citing unfair import rules for bananas.
Banana prices in Europe should rebound somewhat in the fourth quarter, as only about 15% of the EU's annual banana import licenses will be left to grant and supplies will decline, said analyst Timothy Ramey at Deutsche Banc Alex. Brown.
Dole shares fell 25 cents to close at $29.39 on the New York Stock Exchange. They've fallen about 41% in the last year.
In May, Dole warned that a surplus of bananas tied to the glut of import licenses would push down second-quarter profit along with prices for the fruit.
On Thursday, Dole said those lower prices would drop third-quarter profit below the 26 cents a share it earned in the 1998 third quarter. It was expected to earn 39 cents, the average estimate of the analysts surveyed by First Call.
Revenue in the second quarter rose 13% to $1.32 billion, from $1.16 billion.
In the most recent quarter, a gain of $9.9 million, or 17 cents a share, from insurance proceeds, related to banana crop damage sustained by last year's Hurricane Mitch that ravaged parts of Central America, resulted in net income of $47.4 million, or 83 cents.
There were no charges or gains in the year-ago period.
At a Glance
* Cathay Bancorp Inc., the Los Angeles-based holding company of Cathay Bank, reported record second-quarter net income of $7.2 million, or 80 cents per share, compared with $6 million, or 67 cents, a year ago. Interest income for the period increased 8% to $32.6 million.
* Glendora-based Foothill Independent Bancorp reported second-quarter net income of $1.6 million, or 25 cents per share, compared with $1.2 million, or 19 cents, a year ago. Interest income rose to $6.9 million, from $6.5 million.
* SeraCare Inc., a Los Angeles-based maker of plasma-based medical products, reported fiscal first-quarter net income of $821,000, or 7 cents per share, compared with $187,000, or 2 cents, a year ago. Revenue rose to $16.1 million, from $7.9 million.
* Los Angeles-based studio post-production company Todd-AO Corp. reported lower fiscal third-quarter profit, citing soft demand for its sound services in the Los Angeles market. Net income was $62,000, or 1 cent per share, compared with $1.6 million, or 15 cents, a year ago. Revenue rose to $28.1 million from $27.2 million.