Total Produce eyes more buys on the back of their earnings growth

Irish fruit distributor Total Produce remains on the lookout for more acquisitions on the back of stronger-than-expected annual earnings.

The Dublin company is the former general produce arm of Fyffes. It has also increased its investment in Canadian produce group Oppenheimer. The €28.4m spend on another 30% of Oppenheimer takes Total’s stake to 65% and its investment in the company to €43.4m.

As a result, Total Produce has around a 1% share of the north American produce market and a growing international presence.

Oppenheimer has also announced a strategic investment in a joint-venture with New Zealand group T&G Global, which will focus on exporting fresh produce from the US into Asia.

The Canadian company’s sales have doubled since Total Produce’s initial investment in 2011. The Irish company will still however, keep looking for further international growth opportunities.

“The group is continuing to actively pursue additional acquisitions,” chairman Carl McCann said yesterday on the back of the group’s 2016 annual results presentation.

Total Produce spent €60m on acquisitions last year in Europe and North America, with those buys expected to boost group revenues to over €4bn by the end of this year.

“We expect US revenue to ramp up over the next two-to-three years as investment and management and distribution channels start to bear fruit,” said Darren McKinley of Merrion Stockbrokers.

“The group continues to pursue value- enhancing opportunities in new and existing markets, and to this end, it retains significant financial flexibility with net debt to earnings before interest, tax, depreciation and amortisation of 0.5 times at year-end,” said Declan Morrissey at Davy Stockbrokers.

On the back of last year’s acquisition spree, Total Produce ended 2016 with net debt of €48.4m, compared to €18.1m 12 months earlier.

Yesterday’s results showed a near 9% increase in revenues to €3.76bn and a 17% rise in adjusted pre-tax profits to €67.7m. Adjusted fully diluted earnings per share rose by just over 14% to 12.07c and management is targeting earnings per share of 12c to 13c for 2017.

Total Produce’s international arm which covers its north American and Indian businesses increased revenue by 69.5% to €544m. The eurozone division including Ireland saw revenues rise 6.1% to €1.75bn, but the rest of Europe saw a 1% sales fall to €1.52bn.

Total Produce’s shares increased by over 3% in trade yesterday.


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