Fyffes' pre-tax profits up 7.2% to €68.1m

FYFFES have produced results ahead of expectations, helped by cost-cutting in the second half.

Profits before tax rose 7.2% to €68.1 million, while adjusted fully diluted earnings per share rose 12.8% to 14.17 cent.

Shareholders will be paid a total dividend of 5.203 cent, an increase of 10%.

Deputy chairman Carl McCann said steady growth can be expected in the years ahead. But he played down prospects of a bid for Chiquita despite persistent speculation. Mr McCann told the press yesterday "sometimes we get written about ... there aren't that many big deals out there and the probabilities of any one big deal happening obviously are low rather than high.

"It may well be that we'll end up doing the medium sized deals, the very good deals, and if we do Europe its closer and easier than doing that in the States." He added: "I don't think America is any less familiar than Europe; America is a super place and business works very well, but if we're here in Ireland, (Europe) is the easier place for us to want to be geographically close."

Fyffes imports bananas and other fruit and veg into Europe and it said second-half profits rose 24% as it cut costs. Fyffes pays for the fruit it imports in dollars and sells into Europe for euro.

This year, Fyffes earned more interest on its cash and paid a lower tax rate, and benefited as it cut costs from closing some banana-ripening units in 2001 took hold.

Profit rose because "we've taken out some businesses that were not performing to expectations and grown certain other aspects of the business and brought costs down," vice chairman Carl McCann said.

Shares rose 2 cent, or 1.6% 1.30 euro in early trading.

Sales were down 6% to €1.84 billion because of some disposals during the year, that were key to cutting costs.

In all, it spent 49.2m on acquisitions last year. It bought Hortim International, a Czech fresh-produce company, to expand in Eastern Europe and a German banana importer from Del Monte Foods Co for $30 million. At this stage, it could buy part of Chiquita Brands International Inc cheaply due to a share price slump, Irish brokers said.

Such a move would give it a stronger US presence, but the comments by Mr McCann yesterday seem to rule out that possibility.

During the year, the banana market performed in line with 2001 and supply cost cuts were achieved.

Across its other fresh fruit range, the environment was a bit weaker with volumes slightly lower, a fact attributable to the sale of Kahl and Sofiprim.

Fyffes still has high cash balances and earned net interest in 6m during the year against 4.6m previously.

Some shareholders would prefer to see the company use that cash and its strong balance sheet position to expand more vigorously.

Mr McCann said it would be wrong to assume any desire in that regard on the company's behalf.