Fyffes expects full-year earnings of €15m

FRUIT distribution giant Fyffes is expecting its full-year adjusted earnings before interest and tax (EBIT) for 2008 to come in at about €15 million — the high-end of its previous guidance and ahead of most analyst expectations.

Previously, the Dublin-headquartered company said that it was aiming for adjusted EBIT of between €12m and €15m. Some analyst expectations had been as low as €12.5m.

In a trading update, released yesterday ahead of the expected publication of full-year results for 2008 next month, Fyffes said it should show cash balances, at year-end, of €33m. It also said that it is seeking “significant increases” in selling prices in all of its key markets.

“There has been a significant adverse movement in exchange rates in recent months as a result of the strengthening US dollar — particularly relative to sterling.

The group expects further cost inflation in 2009, with higher fruit and shipping costs only partly offset by lower fuel costs,” yesterday’s statement said.

For this year, Fyffes has said it is targeting an adjusted EBIT of between €14m and €18m — a target based on its expectation of achieving the necessary increases in average selling prices.

In the first half of last year, Fyffes reported adjusted EBIT of €15.5m, adjusted pre-tax profits of €15.7m and group revenue of €302m — respective year-on-year increases of 32.7%, 30.2% and 5.6%.

The adjustments exclude various exceptional items and the company’s 40% share of results from Blackrock International Land — the spin-off property company. Before adjustments, Fyffes made a first half pre-tax profit of €35.1m.

In response to yesterday’s trading update, John O’Reilly — an analyst with Davy Stockbrokers — said: “There may be EBIT upside if early agreement can be reached on a reduction in the tariff on dollar banana imports.

“The share price should respond positively to the trading update; it canprogressively re-rate through the year on positive news flow — not the least of which will be that it has negotiated the necessary priceincreases.”

Fyffes shares were trading at 28c in Dublin yesterday, down by 1.72% on the previous day’s close.