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PRODUCE–Rising Banana Prices Produce Strong Quarter for Dole

After a tumultuous two years that pummeled the nation’s largest producer of fresh fruit, Westlake Village-based Dole Food Co. Inc. has announced that revenues will exceed analysts’ expectations for the first quarter of 2000. Dole management said earnings will fall between 60 cents and 65 cents a share for the first quarter when the numbers are reported in late April. Analysts polled by First Call had predicted the company’s first-quarter earnings would be 49 cents a share. Dole’s expected earnings are up from 52 cents a share in the first quarter of 1999. Revenues were $1.2 billion. “In a nutshell, it wasn’t a surprise,” said Ashley Ragsdale, an analyst with Bear, Stearns & Co. “Banana prices have been up in the first quarter.” Dole has blamed many of its troubles on lower banana prices in Europe as a result of quotas the European Union has imposed to protect production of the fruit in its former colonies in the Caribbean. Overproduction of bananas, particularly in fruit coming from Ecuador, also depressed prices in 1999, as did the economic crisis in Russia, which caused that country’s market to shut down. Russia had accounted for 5 percent to 8 percent of worldwide banana sales. Company officials anticipate earnings to continue to rise because of the streamlining of Dole’s banana business. The company has begun to downsize its global banana operation by 17 percent, laying off about 9,000 workers and reducing its marketing and shipping costs. With annual revenue of about $5.1 billion in 1999, Dole weighs in as one of the largest public companies in the greater San Fernando Valley, but the company keeps a remarkably low profile for such a large operation. Dole officials said their North American citrus business has continued to recover from the impact of a severe freeze in California, while the Honduran brewery and soft drink businesses have been recuperating from the destruction wrought by Hurricane Mitch. Both of these events occurred at the end of 1998 and negatively impacted net income from operations during 1999. The company also announced that it is no longer looking for a buyer. In January, Dole hired Goldman, Sachs & Co. to explore strategic alternatives in a bid to boost the stock value. During the exploration period, the company entered discussions with beverage company San Miguel Corp. to look at “potential business combinations.” Those negotiations have been terminated, company officials said. But while Dole has ruled out an outright sale, officials are considering selling off non-core assets, such as its Honduran brewery and soft drink operations, to reduce its debt and improve its balance sheet.

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