DOLE HURT BY BANANA SALES DIP; GROWER CUTS COSTS, TIGHTENS OPERATION.

Byline: Gregory J. Wilcox Staff Writer

Bad weather and weak appetites for bananas combined to spoil Dole Food Co.'s third-quarter earnings, prompting the big fruit and flower grower on Thursday to undertake a worldwide restructuring.

Dole already has started downsizing its global banana operations by 17 percent, closing some production sites, reducing purchases from independent growers and exiting Nicaragua and Venezuela. Combined, these steps will cut about 1,500 jobs at Dole-owned farms and reduce the company's supply of bananas by about 25 million boxes. The majority of this will be fruit purchased from independent growers.

Some shipping operations are also being scuttled; the Westlake Village-based company will trim seven cargo ships from its fleet.

Dole also plans big cuts in the amount of product it tries to sell in developing markets, such as Eastern Europe and Russia. European sales and distribution networks will be consolidated and staffing there reduced by more than 300 people.

Also on the chopping block are noncore and under performing assets which could be sold for up to $200 million over the next 18 months. Executives are in the process of evaluating which assets to sell and the proceeds will be used to pay down debt.

This would be mostly farm land and other real estate in California and Washington.

To cover restructuring costs, Dole expects to take a fourth-quarter charge of up to $40 million.

``It is regrettable that we must downsize our banana business to this extent, but we must be realistic in assessing the current overproduction existing in Latin America,'' David H. Murdock, chairman and chief executive officer, said in a statement.

The big restructuring is needed to staunch the kind of earnings hemorrhage experienced during the third quarter.

Dole said it lost $8 million, or 14 cents a share, for the period ended Oct. 9. The majority of this was attributed to rehabilitation expenses associated with Hurricane Mitch, which devastated Dole's Central American operations last year.

The loss from ongoing operations was $1.9 million, or 3 cents a share, in line with analysts expectations and a warning issued by the company in September. Dole attributed this to weaker pricing in Europe because of an oversupply of bananas.

The company earned $15.6 million, 26 cents a share, in the year-ago period.

Dole, the world's largest producer of fresh fruits and flowers, recorded sales of $1.4 billion during the three-month period, up 17 percent from $1.2 billion in the 1998 third quarter.

Dole already has shuttered its fresh fruit offices in Bakersfield and consolidated its North American sales and production under a single unit in Salinas.

``I think the company is moving very aggressively to reduce costs and that is a positive. The company realized the banana business is not as good as they thought it would be,'' said Nomi Ghez, an analyst at Goldman Sachs & Co. in New York.

Dole's European troubles stem from Russia's economic problems, which have hurt sales, and by a European Union decision to increase the number of banana import licenses during the first nine months of this year.