Pension scheme closure to boost Fyffes annual profits

Fyffes has announced the closure of its Irish defined benefit pension scheme; a move set to boost its annual operating profits by €1m.

The Dublin-headquartered international fruit distribution firm yesterday updated on a number of significant corporate activities.

The closure of the pension scheme follows a once-off final payment of €20m to eliminate the entire future liability of the scheme, €10.5m higher than the deficit provided for in the group’s balance sheet at the end of June.

In addition, Fyffes has announced an expansion of its presence in north and central America; boosting its US melon import business by acquiring additional melon-farming assets in central America.

This comprises a spend of more than $18m (€24.5m) on around 2,500 hectares of leased land, 100 hectares of owned land and four packing stations.

This will boost the company’s capacity in the 2015/16 US import season by nearly 25% and will see the company boost working capital spend by $10m-$12m before the end of this year.

“The expansion illustrates the strength of the division’s performance, with market share in US winter melons growing from 23%, when it was acquired in 2008, to 35% this year,” said Patrick Higgins of Goodbody Stockbrokers.

Also confirmed, yesterday, was the completion of the purchase of a banana farm in Costa Rica for $15m, which Fyffes has been leasing basis since last year.

“We view all three transactions as strategic and beneficial for long-term value to shareholders.

The company retains a very strong balance sheet and has the ability to add value through more acquisitions over time, ” said Darren McKinley of Merrion Capital.