Dole Food Co.'s second-quarter earnings will beat forecasts because the world's largest fruit and vegetable producer is getting higher prices for bananas and pineapples and cutting costs, the company said Monday.
Profit from continuing operations will be $49 million to $52 million, or 88 cents to 93 cents a share, Dole said in a statement. In April, the company said it would earn 55 cents to 65 cents in the second quarter.
The European Union and the U.S. agreed in April to settle an eight-year trade dispute over bananas that had hurt Dole's sales in Europe.
Also, Dole has spent the last two years eliminating jobs and consolidating operations to trim costs.
For example, it now orders some supplies through one office rather than have each region order the same equipment, spokesman Kenneth Kay said.
"It's clear in our mind that they're making the right moves," US Bancorp Piper Jaffray analyst George Dahlman said. He had forecast Dole to earn 60 cents a share.
Shares of Westlake Village-based Dole rose 98 cents, or 6.4%, to $16.40. They had fallen 11% in the last year. Dole will report earnings in the second week of July, Kay said.
Greater-than-expected demand for pineapples in North America drove prices higher. However, vegetable prices declined to "normalized" levels, Dole said, and that will lead to a drop in earnings at its fresh-vegetables unit. Kay wouldn't say what normal prices are.
Profit at Dole's processed-foods unit also will be lower largely because Dole spent more to introduce its Fruit-N-Gel Bowls.
In the second quarter, Dole said, it will have a gain of $5.4 million, or 9.7 cents a share, for the sale of investments. The company will take charges of $20.4 million, or 36.4 cents, for shutting down its California deciduous and Northwest apple businesses. That will make net income $34 million to $37 million, or 61 cents to 66 cents a share.
The company had net income of $45.1 million, or 81 cents, in the year-earlier second quarter. Dole reported no charges or gains a year ago.