Strong banana prices boost Fyffes

Fruit and vegetable distributor Fyffes was today reaping the rewards of strong trading in Europe as it reported a 57% hike in underlying profits.

The Dublin-based group – whose labels include Outspan and Cape – lifted its full-year earnings targets after posting an “exceptional” set of results for its first half.

It benefited from strong banana prices after poor weather in key production areas restricted fruit supplies, helping to lift profits before exceptionals to €75.7m.

Fyffes said it was now expecting full-year earnings to be in the high teens - slightly ahead of forecasts made in June. This was despite trading in July and August being “satisfactory”, following strong results in the second half of last year.

Fyffes is the world’s oldest fruit brand with a history dating back to 1888. It employs about 3,000 people in more than 10 countries operating from more than 75 locations.

Its UK operations have suffered in recent years from consolidation and expansion within the food retail industry.

The market is now dominated by a clutch of supermarket chains which have used their muscle to wring savings out of fruit and vegetable suppliers.

It reported a “relatively flat” outcome in Ireland and the UK, but said its tropical produce division achieved a strong result in the six months to June 30, mainly in continental Europe.

The poorer weather meant volumes were 2.6% lower than in the first half of 2004. Costs of fruit, shipping and fuel were higher but this was partly offset by improved currency exchange rates.

Fyffes posted record sales of €1.11bn, up 17.7% on last time, as it benefited from the full impact of its acquisition of a major stake in Everfresh, a key supplier of fruit to the Scandinavian market.

At the bottom line, pre-tax profits increased by 17.6% to €69.3m, including the impact of property disposals last year.

The firm, which has expanded in continental Europe through a series of acquisitions over the last decade, said it was still on the look-out for further purchases.

The interim dividend was raised by 10.5% to 1.69c.