Slight rise for Dole earnings in Q3
Higher volumes in Europe and improved fruit pricing helped raise the Dole Food Company's earnings in the third quarter despite tough conditions for bananas in Asia.
Chinese quarantine issues with Philippine fruit led to lower pricing and higher costs in the Asian market for bananas, while poor growing conditions put the squeeze on strawberries, but the company still managed a 2.1% year-on-year rise in adjusted EBITDA to US$62.4 million.
Revenue was actually down 6% as the company pulled out of two subsidiaries in Germany and Spain, but pricing was better for fresh fruit overall, particularly for Chilean deciduous fruit and other fruit sold in Asia. EBITDA for fresh fruit still fell due to lower banana pricing in Asia and North America, combined with disruptions from delays.
A berry business acquired in the last quarter of 2011, along with good prices for fresh-packed vegetables and packaged salads, helped improve the company's fresh vegetable category revenue by 10%. Earnings were impacted however following precautionary recall of a limited number of packaged salad products, costing an estimated US$4.6 million.
During the quarter Dole reached an agreement with Japan's ITOCHU Corporation to sell its worldwide Packaged Foods and Asia Fresh businesses for US$1.685 billion in cash.
"We are pleased to say that this transaction is continuing on track, including the required regulatory approval process, and we do not foresee any issues in obtaining all required regulatory approvals as well as approval of our shareholders. We remain optimistic that the sale will be completed by the end of this year," said Dole CEO David A. Lorenzo.
"The third quarter was challenging on a number of fronts, including the continued quarantine issue between China and the Philippines, as well as adverse growing conditions and foreign exchange rate.
"We are pleased that despite these events, we were able to improve performance, compared to last year, in most of our operating groups."