Largest Producer of Fruits, Vegetables Has Huge Reach By CARLOS MARTINEZ Staff Reporter Being the world’s largest producer of fresh fruits and vegetables isn’t easy. Just ask Dole Food Co. CEO David Murdock, who hopes to improve the company’s bottom line after taking it private in April as part of a $2.7 billion deal to acquire the 76 percent of the company’s shares that he didn’t own. Murdock faces a tough challenge, say experts, who point to the company’s market share drop and a tough world economy. But the firm’s worldwide reach gets it recognized as Best International Player in the greater San Fernando Valley. “The global market has been tough on Dole and others, but taking the company private is a positive move,” said Heather Jones, an analyst with BB & T; Capital Markets. By taking the company private, Murdock is free from having to satisfy shareholders seeking to push the company’s stock price higher or seek a higher profile for the company, Jones said. “He can concentrate on his core business now instead of what the shareholders want,” she said. Murdock, who was unavailable for comment, has headed Dole since 1985 when his Flexi-Van Corp. acquired the company. Dole distributes and markets fresh fruit products including bananas, pineapples, table grapes, apples, pears, plums, oranges, grapefruit and other tropical and citrus fruits. Dole grows, distributes and markets approximately 25 different types of fresh vegetable products, including lettuce, cauliflower, broccoli, carrots, spinach, onions and other vegetables. The company’s fortunes have suffered in recent years due mostly to weather and economic shifts. The company has seen its revenues fall the last three years, going from $5.06 billion in 1999, to $4.76 billion in 2000, $4.45 billion 2001 and $4.39 billion last year. The revenue drop is in keeping with a souring world economy, but it also reflects recent troubles impacting the fresh fruit business. Hurricane Mitch, which struck Central America, where Dole has most of its banana and pineapple plantations, decimated crops and killed 11,000 people in 1998. The damage from the hurricane was followed by severe freezes that hurt the company’s citrus crops in California. Making cuts Dole regrouped and sold off its beverage businesses and made cuts in its California operations where in 2001 it laid of 1,900 people, mostly in the San Joaquin Valley. “They’ve had to make some tough choices to stay competitive and cut losses,” said George Dahlman, an analyst with U.S. Bancorp. The company also moved aggressively to overcome the European Union’s banana trade policy which effectively shut out Dole from European markets by imposing heavy tariffs while favoring European firms which grew bananas in former colonies. To combat the Europeans’ moves, Dole bought a 60 percent share in Swedish fruit and vegetable produce grower, Saba Trading, allowing the company to expand into new markets in Asia and Africa using that company’s pre-existing licensing agreements. Dole went on to acquire other European produce growers as a means to enter the European market. One of the company’s bright spots is its fresh cut flowers business that it began in 1998 as an effort to bolster its revenue. But sales fell last year by 11 percent, due mostly to reduced demand in a down economy, the company said. Lawrence Kern, Dole’s chief operating officer, said the company will continue to focus on its core businesses while looking for selective acquisitions to further grow those core units. “Acquisitions in these core businesses may be more difficult to achieve given the highly competitive businesses in which we operate and the current market position in most of these businesses,” Kern said. Packaged salad Among its most recent initiatives is its move into the packaged salad business where it makes up 39 percent of that market. Last year, the segment grew by 5.6 percent, going from $556.1 million in 2001 to $589 million. As the company bolsters its numbers, legal costs have continued to take their toll in recent years due to allegations that the company did not properly protect its agricultural workers in Central America and Asia from pesticides. Dole has maintained that it is innocent. Last year, the company spent $10 million defending itself from 297 lawsuits filed on behalf of 26,000 workers at plantations in Central America, the Philippines and Asia who claim exposure to the banned pesticide dibromochloropropane or DBCP, has made them sterile. The cases are only now coming to trial and Dole officials say they would not have an impact on the company’s finances this year. So far three DBCP manufacturers have paid $41.5 million to settle the cases.
