Profits slip for Fyffes

A banana glut and rising costs peeled back first-half profits at tropical fruits distributor Fyffes, the firm said today.

The Dublin-based company said excess market supply, higher fuel costs and headwinds from a stronger US dollar made for “difficult” conditions, which left pre-tax profits down 28% at €13.3m in the six months to June.

The group said trading conditions had “normalised” during the summer months while Fyffes is pushing up selling prices across all its markets.

According to the Office for National Statistics, the average retail price of a kilogram of bananas has risen from 114c in January to 131c in June.

Fyffes, whose revenues were broadly flat at €402.6m, said conditions were tough in its pineapple division for ``broadly similar'' reasons, with results flat year-on-year.

But a clampdown on costs drove an improved performance from its melon business, prompting Fyffes to hold its interim dividend steady as well as full-year guidance for underlying earnings of between €14m and €18m.

The firm began trading in the 1880s when the first commercial delivery of bananas from the Canary Islands arrived in London for E.W. Fyffe Son & Co.

The world’s oldest fruit brand came into being in 1929 with the famous blue label and its bananas are sourced in the Tropics from countries such as Costa Rica, Guatemala and Colombia.

Fyffes is best known for its fruit business but also retains a 40% stake in property business Blackrock International, which it spun off in 2006.

The group has UK bases in Wakefield, Coventry, Portsmouth and Basingstoke, as well as a Scottish site in Livingston, West Lothian.

The banana glut was caused by the fierce winter conditions across Europe in January, when blizzards shut down the outdoor markets more common in Eastern Europe but also impacted trading in western countries as customers were prevented from getting to supermarkets.

Ships unable to reach Russian ports in the extreme conditions were offloading bananas cheaply in ports such as Rotterdam, causing banana prices to plunge, a Fyffes spokesman said.