Fyffes raises 2009 earnings target

FRUIT importer Fyffes has again raised its full-year earnings target for 2009 after posting good first-half profits.

Despite flat sales of €400 million, the group increased earnings by 18.6% to €18.6m in the period, with returns helped by the ability of the group to pass on higher prices due to a shortage of fruit supplies.

Returns were also boosted by currency hedging, while strong summer sales prompted the group’s latest earnings upgrade for the year as a whole.

NCB Stockbrokers called the figures “strong” and raised its rating on shares from hold to accumulate.

Better green banana pricing and a turnaround of a previous loss in Britain were key positives for the group.

Davy Research has changed its full-year guidance to an EBIT for the full year of €18-22m against €16-20m previously.

This looks modest given the first-half figure, but the group’s results are traditionally skewed towards the first half of the trading year.

Davy now expects full- year earnings to come in at €21m and has also moved its recommendation up to accumulate from hold.

Adjusted earnings per share were 25.6% higher at 4.46 cent and a 10% higher interim dividend of 0.55c has been declared.

Group chairman David Mr McCann said Fyffes’ main costs were 20% higher in the first half, with exchange rate movements partly to blame.

The group had focused on recovering these increases through higher prices and currency hedging and Fyffes said it would continue to look for higher prices to offset the impact of higher fruit costs.

After allowing for exceptional costs to cover the group’s exit from the Brazilian joint venture Nolem and its share of losses from Blackrock International Land, pre-tax profit drops to €12.6m for the period.

Shares made a modest early gain following publication of the results but reverted to their initial price of 46c after the opening flurry and closed down 1c — a fall of 2.2%.