Fyffes expects double-digit earnings growth

Ian Guider

In an unexpected trading update yesterday, it said trading had been strong in the first four months.

“Market conditions have remained favourable through the first four months of 2005, contributing to a significant increase in adjusted profit before tax and earnings per share, excluding exceptional items,” Fyffes said.

“In particular, this reflects a very strong performance in the group’s continental European operations and includes the first time contribution from Everfresh in Sweden, which was acquired in May 2004.”

It added that it was pursuing price increases from its customers to address the lower margins being achieved in its Irish and British operations and the significant cost inflation being experienced by the industry.

“Given this positive start to the year, and notwithstanding the strong performance recorded in the second half of 2004, Fyffes is targeting a double-digit increase in adjusted earnings per share for the full year 2005, ahead of current market expectations,” a statement said. Brokers had expected Fyffes to have earnings per share this year of about 19 cent, up 1c from last year.

Shares, which had been subdued before the trading update late in the afternoon, closed up nearly 2.7% on the Irish market at 2.29.

Last year, profit smashed through the E100 million barrier for the first time due to strong trading in Europe and from the sale of a number of development properties. Property sales added nearly E15m to last year’s profits, and it is expecting to do a number of deals this year to add to earnings.

The only downside on the horizon for Fyffes is the outcome of the insider dealing case it is taking against former shareholder DCC and its chief executive Jim Flavin.

The company spent E4.1m on legal fees last year and the case is costing the company about E30,000 a day in the High Court.

It is expected to last until the end of the legal year in July with Ms Justice May Laffoy likely to deliver her ruling in the autumn.

Even if Fyffes win an appeal to the Supreme Court is almost certain, meaning more hefty legal bills.