BANANA BUSINESS DOLE SHOWS GAINS.

Byline: Brent Hopkins Staff Writer

WESTLAKE VILLAGE - Confidently predicting it will beat Wall Street's analysis, Dole Food Co. announced Monday it expects earnings of 88 cents to 93 cents per share for the second quarter of 2001.

Thompson/First Call analysts had put the fruit and vegetable giant's per-share earnings at between 58 cents and 60 cents, but Dole is projecting an earnings report in early July much higher than anticipated.

Dole's stock rose 98 cents, or 6.36 percent, to close Monday at $16.40.

Net income, not including $38 million in pretax charges, is expected to be in the $49 million to $52 million range. The $38 million relates to charges for sales of investments and the shutdown of California and Northwest orchards.

``There's been a fundamental shift in the banana business, and that's behind the good news for Dole,'' said Terry Bivens, a food analyst for Bear Stearns. ``They're going to do much better on fresh fruit than anyone thought they would.''

Though the company also maintains vegetable, processed food and fresh flower operations, it was fresh fruit that turned out to be the top banana, earningswise.

The company did not disclose estimates for what percentage of total sales bananas would account for but agreed that they would play a significant role, both in Europe and North America. Consumption and pricing are up on both continents, aided by a reduction of worldwide stocks.

``The banana industry has been suffering for the last three to four years from general oversupply,'' said Dole's chief financial officer and vice president Ken Kay. ``Those are coming down, which is certainly improving things.''

As recently as the fourth quarter of 2000, reported in January of 2001, the company lost money on depressed sales. For the fourth quarter, it posted a $7.4 million loss, 13 cents per share. Fortunes have shifted, however, with earnings of $34.7 million, 62 cents per share. Future sales may also be boosted, with a bitter international tariff dispute over banana imports resolved between the European Union and the United States in early April. Tariffs and quotas from Latin American countries, where Dole maintains extensive plantations, are being gradually lessened before being eliminated in 2006.

Other factors played into the predicted success, Kay said.

``It's a result of several things,'' he said. ``There's the cost-cutting measures that the company's been implementing for several years.''

He did not cite specifics, saying they were contained in the company's lengthy 2000 annual report. Though the report discusses shutting down operations in worldwide fresh fruit operations, it does not address significant cuts for the most recent quarter.

``They'll never tell you what they are,'' said George Dahlman, a food analyst for US Bancorp Piper Jaffray. ``When profits go up, they'll take credit for them working, then when (profits) go down, they'll claim it's outside forces.''

The company announced plans in March to halt production of grapes and stone fruit in its Central Valley ranches, and it planned to sell 5,000 acres of ranch land there to reduce debt. The primary factor in the positive projection, however, stemmed from good luck in the banana sector.

``They live in a very volatile world, where prices change quite rapidly,'' Dahlman said. ``And right now, things are going for them.''