Fyffes ponders buyback as earnings rise

Fyffes may have the means to do a share buyback as the fresh produce company posted a 14% increase in profits.

The company’s planned tie-up with Chiquita was abandoned in 2014.

Darren McKinley, analyst at Merrion Capital, said that if no major acquisitions loomed into sight that Fyffes had the capacity to buy back shares, after its earnings statement showed it had increased profit margins.

“It is quite a positive story,” he said. Fyffes shares were however down by up to 3% yesterday.

The company said that adjusted earnings before interest, tax, depreciation and amortisation rose 14.2% to €45.8m, as all revenues, including that of its joint venture companies, rose over 12% to €1.22bn.

The closure of its defined benefit pension scheme accounted for most of the costs it identified as non- recurring in 2015.

It said it was aiming to achieve earnings before interest, tax, depreciation and amortisation of €42m to €48m this year.

Fyffes has expanded into melons, which deliver higher margins, but earnings from this division were hit by poor growing weather.

It said it paid a tax rate equivalent to 13.8% last year, up from the 12.7% rate paid in 2014, reflecting “some changes in the geographic mix of the groups’s profits”.

“Having achieved a further step-up in profitability in 2015, Fyffes is focused on consolidating at this higher level of earnings,” the company said.

“Fyffes is pursuing increases in selling prices in all markets in response to the continuing strength of the dollar against the euro and sterling,” it said.

The company is also seeking out what it described in a statement as “a number of attractive acquisition opportunities”.

“Fyffes has the capacity to carry out a share buyback, with the most recent share buyback executed in 2014,” Mr McKinley said.