Dole Peels Away Revenue for a Net Loss in Q4

Andrew Klips  |

Dole Food Co. (DOLE) reported after Tuesday’s closing bell that it swung to a loss in the fourth quarter as revenues sank, largely because of the sale of its worldwide packaged foods and Asia fresh business and associated costs.

In September, Dole said that it was selling that portion of its business to Japan’s Itochu Corp, Japan’s third-largest trading house, in a deal valued at approximately $1.69 billion as the company looked for ways to reduce debt.  Tokyo-based Itochu also got exclusive rights to the Dole trademark on packaged foods globally and on fresh produce in Asia, New Zealand and Australia as part of the deal.  The operations being sold generated $2.5 billion in revenue during 2011 for Dole.  The transaction is set to be completed on April 1.

For the fourth quarter, Westlake Village, California-based Dole reported revenues declining by almost 8 percent to $888 million from $962 million in the year prior quarter.  The company posted a net loss of $210 million during the recent quarter, compared to a profit of $4 million in the fourth quarter of 2011.  Not counting the operations that are being discontinued, Dole reported a loss of $88 million, or 99 cents per share, during the quarter, compared to a profit of $6 million, or 6 cents per share, a year earlier.  Excluding one-time charges and other items, the company lost $52 million, or 59 cents per share in the latest quarter, after a profit of $4 million, or 4 cents per share in the year prior quarter.

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Analysts, which generally exclude items in estimates, were predicting a loss of only 2 cents per share and revenue of $1.3 billion.

“The combined revenue of Dole’s discontinued operations being sold represented approximately 38% of Dole’s revenues, at $2.6 billion in 2012,” said C. Michael Carter, Dole’s President and Chief Operating Officer at Dole.  Carter noted that, “the new Dole will continue as an international commodity produce company with a smaller footprint, retaining its entire North American fresh vegetables business as well as its fresh fruit businesses in North America, Latin America, Europe and Africa…”

The remaining segments of Dole generated $4.25 billion in revenues in fiscal 2012 compared to $4.78 billion in fiscal 2011. The 11 percent drop in revenue was principally due to corporate divestures in fresh fruit subsidiaries in Spain and Germany, which accounted for $539 million of the decrease.  Net loss for the year was $142 million, versus a profit of $42 million in 2011.  Excluding items, the company earned 49 cents per share for 2012, down from $1.37 in the year earlier.

Dole reaffirmed that it expects adjusted earnings for fiscal 2013 at the low end of its previous guidance of $45 million to $60 million because of ongoing declines in the fresh fruit industry, particularly the market conditions for bananas.

The company ended the fourth quarter with $91 million in cash and $1.6 billion in net debt.

Shares of DOLE have actually risen by about 23 percent in the past 52 weeks, with Tuesday’s close at $11.73.  Shares have fallen in extended trading following the earnings release, down about 6 percent.

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