Letter Shaffer

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Nino/15″/mike1st/mark2nd

By JASON BOOTH

Staff Reporter

El Ni & #324;o storms have been hammering golf courses, outdoor caf & #233;s and assorted other small businesses across Los Angeles for months. Now the storms’ effects are hitting the bottom lines of some of L.A.’s bigger companies.

Pasadena-based Ameron International Corp. announced that El Ni & #324;o was the key reason it lost $940,000 in its first quarter, which ended Feb 28, compared with net income of $938,000 for the like period a year earlier. Its stock price, which has ranged from $47.63 to $70 a share over the last 52 weeks, was trading late last week in the high $50 range.

Ameron’s two biggest businesses are the production of steel and concrete pipes used in heavy infrastructure projects, such as sewers and storm drains, and heavy-duty paints used for large structures such as bridges, buildings and ships.

“When the ground is saturated with rainwater, contractors can’t dig trenches to lay pipes,” said Ameron spokesman Dan Stracner, explaining the loss of business on the West Coast.

At the same time, shipments of industrial paint were delayed or cancelled due to extreme weather conditions in the Gulf of Mexico that halted infrastructure projects and the repainting of Navy ships and oil platforms, he said.

Westlake Village-based Dole Food Co. is another big local company that got swamped by El Ni & #324;o. Dole recently warned investors that its first-quarter net income could be as much as 50 percent below the year-earlier period due to abnormal weather conditions both in California and Central America.

Dole’s first-quarter 1997 net income was $42.0 million on revenues of $965 million, meaning El Ni & #324;o could cost Dole as much as $21 million.

“The weather has been so good (in Latin America) that it has put a glut of bananas on the market,” said Meredith Wright, a company spokeswoman.

Since issuing its earnings warning in mid-March, Dole’s share price has fallen from above $57 to about $48 as of last week.

Kaufman & Broad Home Corp., the largest home builder on the West Coast, said its operations in California have also been hurt by the heavy rain.

In a statement, Chairman Bruce Karatz said that despite record performance, there was a “modest impact on California deliveries related to severe El Ni & #324;o rains in January and February.” He predicted that deliveries in the second quarter would also be hurt by the weather.

“In the construction business, predictability is a key ally,” said Jeff Charney, vice president of marketing. “When you have to fight El Ni & #324;o, predictability goes out the window.”

And El Ni & #324;o’s wrath is far from over. An El Ni & #324;o-induced water shortage in Panama, for example, has reduced water levels in the Panama Canal. In response, weight restrictions have been placed on container ships allowed to pass through the canal, shipping executives said. The maximum allowable draft for ships passing through the canal has been reduced from over 40 feet to 35 feet.

As a result, container ships leaving Los Angeles and bound for European or East Coast ports are being forced to reduce their loads, while ships coming from Asia are being forced to unload some of their cargo here before sailing for the canal, shipping and port officials said.

Ships from Asia have been off-loading an average of 200 extra containers in Los Angeles, which are then sent to their destinations by train.

While shipping companies are currently bearing the increased costs related to the canal restrictions, those costs eventually could be passed on to customers, shipping and port officials said.

Another problem arising from the situation is that the increased number of containers being unloaded is adding to congestion at local ports, and that could lead to delays similar to those suffered in late 1997, said port officials.

“We are concerned that in the peak summer season we could have some added congestion,” said Dan Wylie, director of trade at the Port of Long Beach.

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