UPDATE 2-Oversupply of melons, bad weather hurt Fresh Del Monte

* Q1 $0.56 vs est $0.84

* Sales of $879.7 mln miss est by 4 pct

* Melon pricing in North America weak

* Shares fall 13 pct (Adds analysts' comments, conference call details, share movement)

By Amitha Rajan

BANGALORE, April 28 (Reuters) - An oversupply of melons and severe weather conditions in Costa Rica dented quarterly profit at Fresh Del Monte Produce (FDP.N), sending the fruit and vegetable producer's shares down 13 percent.

Analyst William Chappell of SunTrust Robinson Humphrey said the company's issue of melons oversupply was a case of bad timing. Melon pricing in the first quarter fell 19 percent, while volumes grew 40 percent.

"They dramatically expanded their melons business late last year just before the market really fell apart. And it never really helped their numbers," Chappell told Reuters.

BB&T Capital Markets analyst Heather Jones, who expects weakness in melons business to continue in the next quarter, said costs associated with the Costa Rican floods were higher than her estimates.

On a conference call with analysts, the company said adverse weather led to an 11 percent increase in fruit costs for bananas exported from Latin America and a 10 percent increase in costs for pineapples sourced from Costa Rica.

Sales at the company's other fresh produce segment, which includes melons, pineapples, tomatoes and fresh-cut fruits, were flat but gross profit at the segment fell 48 percent. Overall pricing for the segment fell 15 percent.

Shares of Coral Gables, Florida-based Fresh Del Monte were down $1.91 at $15.12 Tuesday afternoon, making them one of the top percentage losers on the New York Stock Exchange. They had touched a low of $14.80 earlier.

BANANAS - GROWTH CONTINUES

Banana sales continued to grow, partially offsetting weakness in Fresh Del Monte's other businesses such as melons and prepared food. Sales in the segment rose 6 percent to $361.5 million and pricing was up 7 percent.

"Banana fundamentals remain strong - North American contract pricing is up meaningfully this year and Asian banana demand remains robust," BB&T's Jones said.

Companies like Fresh Del Monte and rival Chiquita Brands International (CQB.N) have been gaining from high banana prices as supply continues to be constrained due to bad weather in parts of Latin America.

For the first quarter, the company earned $34.9 million, or 55 cents a share, compared with $63.6 million, or $1.00 a share, a year earlier. Excluding asset impairment and other charges, it earned 56 cents a share.

Net sales fell marginally to $879.7 million, from $894.9 million a year ago, hurt mainly by a 25 percent fall in sales in the prepared food segment.

The segment experienced weakness in the canned-fruit and beverage product categories, primarily in the United Kingdom, the company said.

Analysts on average expected a profit of 84 cents a share, before special items, on revenue of $917.6 million, for the quarter, according to Reuters Estimates.

Gross margin fell to 9.5 percent from 10.8 percent in the year-ago quarter. (Editing by Mike Miller and Deepak Kannan)