Dublin-based Dole plc, the world's largest fresh fruit and vegetable supplier, reported on Friday that operating earnings dropped by more than a third in the third quarter, driven by rising transport, packaging and labour costs and a weak international market for fresh packed vegetables.
The company, formed in July through the merger of Total Produce – a 2006 spin-off from Fyffes – and US rival Dole Foods, said that its adjusted earnings before interest, tax, depreciation and amortisation (ebitda) declined by 35.4 per cent to $59.7 million (€52.8 million). Revenue rose by 0.3 per cent to $2.3 billion. All the figures in the report were on a pro-forma basis, as if the merger had occurred last year, in order to give an insight into trends.
For the first nine months of the year, revenue rose 4.5 per cent to $7.1 billion, while ebitda rose by 12.6 per cent to $337.7 million.
“Dole plc has delivered a strong performance for the first nine months of 2021 in the context of inflationary pressures across our North American and European markets during the third quarter,” said group executive chairman Carl McCann, who previously held the same title at Total Produce.
“With industry-wide supply chain congestion and labour shortages, our diversified business model has proven itself to be responsive and resilient.”
Dole is targeting full-year revenue in the range of between $9.2 billion and $9.4 billion, up from $9 million last year, and ebitda of between $390 million and $400 million, compared with $372 million in 2020.
The company's largest division by sales and earnings, Dole Fresh Fruit, posted a 0.8 per cent dip in revenues in the third quarter, with lower banana volumes in North America and banana pricing in Europe.
Ebitda in the division slid by 53 per cent on the year due to lower revenue and higher transportation costs in North America, input materials increases, as well as cost pressures from the ongoing supply chain impact caused by hurricanes in Honduras and Guatemala in November 2020, the group said.
Inflation
Dole Fresh Vegetables’s ebitda for the third quarter slumped by 90.8 per cent, due primarily to the significant impact of inflation in inland transportation as well as in packaging and labour and the persistently weak, oversupplied fresh packed vegetables market, it said. Group chief executive Rory Byrne told analysts on a conference call that the fresh packed vegetables market was weak and oversupplied because the catering industry which relies on them has not recovered as hoped.
The group has been pushing up prices for its value-added salads customers to help claw back its own rising costs in this labour-intensive segment of the market.
Total Produce had been listed on the Dublin exchange since it was spun off from Fyffes in 2006, but it abandoned its Irish quotation as part of the merger, with the wider Dole plc group floating on the New York Stock Exchange in late July.
Dole raised $400 million in an initial public offering (IPO) at the time, priced at $16. The shares have dropped since then, trading at about $13.30 as of early afternoon in New York on Friday.
When asked by an analyst if Dole may consider buying back some of its stock to take advantage of the low valuation at which they are trading, Mr Byrne said that while it may appear “contradictory” to repurchase shares so soon after an IPO, “there is no doubt that we will keep that tool in the toolbox”.
