MAY 28, 2013 — In another demonstration that depressed world shipbuilding prices can bring out the bargain hunters, Dole Food Company, Inc. (NYSE: DOLE) today announced that its Board of Directors has approved updating the company's owned vessel fleet, with the acquisition of three new specialty built refrigerated containerships for its U.S. West Coast operations, costing approximately $165 million, for a phased delivery in the late 2015 to early 2016 time frame.
"Updating our West Coast shipping capabilities is very important strategically to the company's competitive differentiation and future growth prospects," said C. Michael Carter, Dole's President and Chief Operating Officer. "These ships will be 27 years old at the time of replacement. The new ships will be more fuel efficient and will be built to Dole's exacting specifications and design, with a 770 FEU capacity (compared to the replaced ships with 491 FEU) and equipped with gantry cranes."
Dole also announced the indefinite suspension of the previously announced share repurchase program for up to $200 million of its outstanding common stock.
"At this time we have decided to use our existing funding resources to take advantage of this opportune window in the shipping industry, when these specialty ships can be built at very competitive costs," said Mr. Carter. "While Dole is also seeking to monetize its excess Hawaii land holdings by actively marketing the approximately 20,600 acres of land that it is not currently farming on the island of Oahu, we do not expect that this land will provide a near-term source of liquidity given the magnitude of farmland involved. With the approximate $165 million investment in ships and the drag on earnings due to significant losses in our strawberry business, the share repurchase program is being suspended indefinitely."
Dole indicated that the volatility in its strawberry business has been especially pronounced during the first half of 2013 due to unusual weather conditions, at a time when the best prices are usually available for strawberries, especially in the first quarter.
"Dole is the second largest strawberry supplier in the United States, and all of our 962 acres in the Oxnard, California growing region were affected, limiting our production to mostly freezer and juice outlets. We expect full-year losses in our strawberry business to be approximately $23 million below plan," said Mr. Carter.