Dole Foods downgrades earnings forecast on back of strong dollar
Dublin-headquartered Dole Foods, which merged with Total Produce last year to become the largest supplier of fresh fruit and vegetables in the world, saw revenue double to $2.4 billion (€2.4 billion) in the second quarter of 2022.
The increase was primarily driven by the impact of revenue from the legacy Dole business following the merger, it said.
“The enhanced scale and diversification of our vertically integrated business enabled us to deliver strong results for the second quarter of 2022, in line with our expectations,” executive chairman Carl McCann said.
On a pro-forma basis, revenue, however, fell by 4.2 per cent or $102.3 million primarily due to negative foreign currency translation movements of $112.2 million and a net unfavourable impact of $69 million from acquisitions and divestitures. The “pro forma” figures were calculated as if the merger had occurred on January 1st, 2020, in order to give an insight into trends.
Total Produce, originally a spin-off of Irish fruit company Fyffes, completed the acquisition of Dole Foods in July last year, creating Dole plc.
Despite the strong figures, the group was forced to downgrade its full-year earnings expectations on the back of a slower-than-expected return to operating profitability of its “Fresh Vegetables” segment and the translation impact from the strengthening dollar.
Dole said it was now targeting full-year earnings, as measured by adjusted Ebitda, of $330- $350 million for the full year, a reduction of approximately 5.5 per cent from prior guidance.
“The global economic environment remains uncertain and complex and we are currently seeing positive trends along with some further challenges for the remainder of the year,” the company said.
“We are seeing signs of increasing demand in categories with lower retail selling prices such as bananas, whereas there is evidence of demand for higher-priced, value-added products reducing,” it said, noting there had been some stabilisation in prices for key commodities such as packaging, fertiliser and oil.
“The geopolitical conflict in Ukraine and Russia is ongoing and as such it remains difficult to accurately predict what overall impact the conflict may have on global trade flows, cost inflation and foreign exchange rates, and how the group’s results of operations and financial condition may be impacted over the remainder of this financial year,” it said.
Dole said adjusted diluted earnings per share for the three-month period was $0.44 compared to $0.70 for the pro-forma comparative three months. Dole‘s net debt as of the end of June stood at $1.06 billion.
