Dole's Asian fresh produce and global packaged food businesses back in black

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Dole's Asian fresh produce and global packaged food businesses back in black

Japanese trader Itochu (TKS: 8001) has announced a turn in fortunes for its subsidiary Dole International Holdings in the 2017 financial year which ended in March, recording JPY8.3 billion (US$73.2 million) in net profit. 

The result compares to a net loss of JPY16.9 billion (US$149 million) in the previous year, while in FY2018 the company is expected to notch a 17% uptick in net profit to JPY9.7 billion (US$85.6 million).

Itochu purchased Dole Food Company's Asian fresh produce and global packaged food businesses for US$1.7 billion in 2012.

In its financial statements, the company said both segments had seen improved profitability for the year, while hints to how this came about were explained in a Q&A of company representatives released in December.

"Climate risks such as typhoon and drought were materialized more frequently than we had anticipated. As a result, the production volume of pineapples and bananas decreased significantly," an Itochu representative said of previous challenging results.

"However, thanks to the improvements we have made, such as an investment in irrigation facilities that contributed to the recovery of pineapple production, the packaged food division has recovered.

"While the fresh banana business was affected by disease, production has now recovered by improving irrigation facilities and breed improvement."

The company also highlighted demand for Dole-branded bananas was strong in China and Asia.

"At the time of the acquisition, 80% of Dole’s bananas were sold in Japan. Now due to the expansion of sales in Korea, China, New Zealand and [the] Middle East, this became 50%," a representative said.

"In addition to canned pineapple, we would like to expand sales of frozen pineapple in North America. As for our target areas, in addition to North America, we would like to expand the packaged food business in Asia and Europe."

The Nikkei Asian Review reported Itochu had also pulled out of non-lucrative products in its Japanese unit, including vegetables, citrus and mangoes.

The group also reportedly withdrew from its Australian banana business in March, 2016, as hopes for a broader roll-out of the brand through Philippine banana imports were dashed through a continued ban on the fruit.

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