Initial fees connected with Fyffes’ planned merger eats into firm’s profits

Initial professional fees connected with its proposed merger with US banana producer, Chiquita, affected profits at Fyffes in the early part of this year, but the Dublin-based fruit distributor has maintained its positive earnings forecast for this year.

Fyffes’ first-quarter results, published yesterday, show an 18.4% annualised rise in adjusted pre-tax profits to €15.8m, with group revenue up 5.4% at €256.7m. Total revenue, when the effect of joint ventures are taken into consideration, was up by 3.4% to €306.5m. Adjusted EBITDA was up by nearly 12% at €17.8m.

Chairman David McCann said the company had delivered “a strong result” in the first quarter of this year; adding that the board still expects full-year EBITDA to come within the €30m-€35m range previously guided.

Net debt, as of the end of March, amounted to €21.1m; down from €29.3m at the same point last year and net funds of €400,000 at the beginning of this year.

However, an exceptional charge of €6.2m was taken for estimated professional fees and related costs incurred to date in connection with Fyffes’ proposed merger with Chiquita; the regulatory review of which is ongoing.

Fyffes and Chiquita announced their intention to merge last month, with it hoped that regulatory and shareholder approval will be granted before the end of this year.

Last week, North Carolina-headquartered Chiquita reported a $25m loss, for 2013, due to drought and shifting rainfall patterns and said that the merger with Fyffes — which will create the largest banana distributor in the world — will go a long way towards mitigating such problems, due to Fyffes’ greater geographical reach.