Fyffes interim profits surge 44%

FRUIT importer Fyffes had good news for shareholders yesterday when it announced a 44% rise in profits for the six months to June.

The company made €60.6 million before tax as sales ticked up 4.2% to €1.04 billion.

Profits from property deals accounted for €14m of the total.

Chairman Carl McCann said that the results were strong and marked a 15% increase in trading profits.

Exchange-rate swings worked in the group’s favour but there was a need to manage costs to counteract pressure from more expensive fuel and transport.

Mr McCann said that the company continued to keep an eye out for potential acquisitions and could spend in the region of €500m if the right deals came along.

The company has been linked with Italian fresh produce distributor Bocchi in recent months. A deal between the two would double Fyffes’ current turnover.

Its recent €29m investment in Sweden, where it holds 60% of fruit distributor Everfresh, delivered a return of €1.2m during the period.

The group’s cash balance was €152m at the end of June, €10m higher than the June 2003 level.

Interest income from the cash pile rose from €1.7m to €2.6m as the group benefited from higher interest rates in Britain.

The company continued to use some of its cash to invest in property and splashed out €20m during the period on sites in Edinburgh and near the proposed exit of the Dublin Port Tunnel.

Property deals have contributed €30m to profits over the last four years. The company also formed a new joint venture with Belfast group Lagan Developments to buy a 28-acre site with potential for warehousing in Navan, Co Meath.

A previous joint venture with Lagan in respect of a shopping centre site in Dundalk, Co Louth, was a success.

Mr McCann said Fyffes had become “even more confident” about the upcoming court hearing of its action against distribution group DCC.

The case alleges DCC illegally profited from the sale of its 10% stake in Fyffes in early 2000. Fyffes could be in line for an €85m payout if the court finds in its favour.

DCC denies any wrongdoing. Davy analyst John O’Reilly said that the results were “well ahead of expectations” and that the group had performed well in both its traditional businesses and more recent ventures, such as its investment in sweet pineapples.

The company will pay an interim dividend of 1.53c per share, 10% higher than last year. Mr McCann also said it would deliver a double digit increase in earnings for the full year and that trading over the summer months had been satisfactory.

He added that the company wanted the current rules governing fruit imports into the EU to remain in place.

The current system, which features both tariffs on imports and quotas, is due to be replaced with a tariff-only version in 2006. Fyffes shares closed down 1c at €1.83 yesterday.