Shares of Dole Food Co. Inc. fell nearly 6 percent on Tuesday after the fresh vegetable and fruit company dropped a share buy-back plan and will instead use the money to modernize its shipping fleet.
The Westlake Village company had planned to spend $200 million to repurchase shares. Dole said that its board now has approved spending $165 million to purchase three new refrigerated container ships for its U.S. West Coast operations. The customized ships will replace less fuel-efficient vessels that will be 27 years old by the time they are phased out between 2015 and 2016.
In addition, Dole said that losses in its fresh strawberry business earlier this year, due to bad growing weather, were another factor in deciding to suspend the share repurchase program.
“Dole is the second largest strawberry supplier in the United States, and all of our 962 acres in the Oxnard growing region were affected, limiting our production to mostly freezer and juice outlets,” Chief Operating Officer C. Michael Carter said in a statement. “We expect full-year losses in our strawberry business to be approximately $23 million below plan.”
Dole, which paid down debt by selling its packaged foods and Asian fresh produce business for $1.7 billion last month, also said that it hopes to raise more cash by selling excess land in Hawaii. It is marketing 20,600 acres not currently being farmed on the island of Oahu, but cautioned that it does not expect to make a sale soon.
Dole shares closed down 65 cents, or 5.9 percent, to $10.41 on the New York Stock Exchange.