Fyffes sees shares surge 4%

FYFFES shares jumped 4% yesterday after the fruit importer said its first-half figures would be significantly ahead of expectations.

The company, which is at the centre of a long-running court case with marketing and distribution company DCC, told the stock exchange in a routine trading statement that its positive start to 2005 continued into the middle of the year. The group’s operations in continental Europe did particularly well.

Shareholders could look forward to an improved bottom line as a result, the company said, with adjusted earnings per share (EPS) for the six months to June around 40% ahead of the same period last year.

The first half is considered more important by Fyffes because of the highly seasonal nature of its business.

Adjusted EPS for the full year would be around 15% ahead of last year thanks to the stronger first half, the company said.

Yesterday’s statement came less than two months after a market update that flagged first-half earnings would see a “double-digit increase.”

There was also positive news on cost management and investment in new facilities.

The company said that it was working hard to counteract “significant” cost inflation across the group and would maintain a focus on improving profitability in its key divisions in Britain and Ireland.

It had also signed agreements over the last six months to invest €22 million in new properties in a number of locations around Europe and singled out the Scottish city of Edinburgh as the most significant.

“The group also intends to seek proposals in relation to the development of its existing valuable property in Edinburgh,” the statement said.

Fyffes has made a number of significant investments in property in recent years. The nature of Fyffes’ business means it is a significant generator of cash, but it has suffered from low interest rates and has struggled to deliver returns from its cash pile of around €150 million.

Investing in property, in fast-growing towns such as Dundalk and Navan, has allowed it to use some if its cash to earn more than it would from bank deposits.

The company has come under pressure to use its cash more productively and has been linked with several substantial takeover deals.