Fresh produce company Dole (NYSE: DOLE) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 1% year on year to $2.1 billion. Its non-GAAP EPS of $0.35 per share was 10.7% below analysts’ consensus estimates.
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Dole (DOLE) Q1 CY2025 Highlights:
- Revenue: $2.1 billion (1% year-on-year decline)
- Adjusted EPS: $0.35 vs analyst expectations of $0.39 (10.7% miss)
- EBITDA guidance for the full year is $380 million at the midpoint, below analyst estimates of $384.6 million
- Operating Margin: 3%, in line with the same quarter last year
- Market Capitalization: $1.34 billion
StockStory’s Take
Dole’s first quarter performance was shaped by varied dynamics across its core businesses. CEO Rory Byrne noted that both the diversified EMEA and Americas segments saw solid operational results, with strong like-for-like growth helping to counterbalance anticipated challenges in the fresh fruit segment. These challenges stemmed largely from the lingering effects of Tropical Storm Sarah, which raised sourcing and shipping costs. Byrne highlighted, “Our production and sourcing teams are doing an excellent job mitigating this, and are working diligently to manage the reinvestment and rehabilitation process.” The completion of a major refinancing and the company’s first dividend increase since 2021 also featured in management’s review of the quarter.
Looking ahead, Dole’s updated guidance rests on expectations of continued balanced supply and demand in core categories like bananas and pineapples, as well as a potential tailwind from recent currency movements. Management cautioned that short-term risks remain, particularly from external factors such as tariffs, labor markets, and foreign exchange rates. Byrne stated, “A good start to the year along with our resilient and diverse business model gives us confidence in our ability to navigate the challenges of the current volatile economic environment.” Strategic investments, particularly in automation and rehabilitation of storm-impacted assets, are expected to be partially offset by insurance proceeds.
Key Insights from Management’s Remarks
Management attributed the quarter’s results to strong operational execution in diversified segments and effective mitigation of fresh fruit sourcing challenges. Key product categories and market dynamics shaped divisional performance across regions.
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Diversified EMEA outperformance: The EMEA segment (Europe, Middle East, and Africa) delivered strong like-for-like revenue and EBITDA growth, helped by robust demand in the UK, Spain, and the Netherlands. Recent strengthening of the euro is expected to shift from a headwind to a tailwind for future reported results, provided current rates are maintained.
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Americas segment resilience: Diversified Americas showed double-digit like-for-like EBITDA growth, driven by solid performance in North America (notably kiwis, citrus, and avocados) even as export markets normalized after a strong previous year for Chilean cherries. Management noted that distribution and handling businesses in North America contributed meaningfully to profitability.
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Fresh fruit cost pressures: The fresh fruit division faced increased sourcing costs and higher shipping expenses due to Tropical Storm Sarah’s impact in Honduras and scheduled vessel maintenance. These headwinds were partially offset by higher banana volumes and improved pineapple pricing, but overall margins remained pressured.
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Strategic capital allocation: Dole completed a $1.2 billion credit facility refinancing, enhancing financial flexibility for growth initiatives. Capital expenditure focused on vessel dry dockings, farming investments, and warehouse efficiency projects, with additional incremental spend targeted at rehabilitating Honduran farms.
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Dividend policy milestone: The company announced its first dividend increase since 2021, raising the quarterly payout by 6.25%, reflecting management’s confidence in long-term business prospects despite ongoing market volatility.
Drivers of Future Performance
Dole’s outlook is shaped by expectations for stable demand in core categories, ongoing recovery from storm impacts, and evolving external risks including tariffs and currency movements.
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Banana and pineapple supply-demand: Management sees balanced supply and demand dynamics for bananas and pineapples, anticipating that this stability will support both volumes and pricing across major markets through the remainder of the year.
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Currency movements and tariffs: The recent appreciation of the euro against the U.S. dollar may aid reported results if sustained, while management’s guidance factors in known U.S. tariffs. However, they emphasized that forecasting remains challenging due to potential volatility in foreign exchange rates and the evolving tariff landscape.
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Strategic investments and storm recovery: Reinvestment in storm-impacted Honduran farms, supported by insurance, is expected to improve yields and operational resilience. Additional capital allocation toward automation and internal development projects aims to drive productivity and future earnings growth, though timing and returns from these efforts remain subject to execution and external conditions.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace of recovery and yield improvements in Honduran farms affected by Tropical Storm Sarah, (2) the impact of euro-to-dollar currency movements on reported results, and (3) progress toward a strategic outcome for the fresh vegetables division. Execution on internal automation and development projects will also be important markers for Dole’s ability to deliver on its updated guidance.
Dole currently trades at a forward P/E ratio of 10.2×. At this valuation, is it a buy or sell post earnings? Find out in our full research report (it’s free).
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