Bad winter hits Fyffes as profits tumble 25pc in first half
Published 04/09/2010 | 05:00
FRUIT importer and distributor Fyffes said yesterday that profits declined more than a quarter in the first half of the year, as the harsh winter hit trading.
Profit before tax in the six months to the end of June fell by 28pc year-on-year despite group revenue increasing slightly to €344.2m. Diluted earnings per share (EPS) fell 24pc to 3.38c while the dividend remains unchanged at 55c per share.
The company was hit by the particularly cold winter, with the banana sector, in particular, suffering from over supply. The pineapple business also suffered in the same conditions.
As well as this, the first-half results were hit by EU plans to reduce banana tariffs this year. Selling prices were impacted as retailers effectively took their share of this refund upfront by reducing selling prices.
Despite these difficulties, according to chairman David McCann, the market has improved since.
"Trading conditions were difficult for much of the first half of the year, resulting in a significant reduction in profits in the banana category. Market conditions have normalised, [however], in the summer months," he said.
Mr McCann added that the company was continuing to increase selling prices across the board and that it was maintaining its target of earnings before interest, tax, depreciation and amortisation of between €14m and €18m.
Despite the weak numbers, Fyffes had flagged their difficulties earlier in the year, so the half-year results were broadly in line with expectations.
NCB stockbrokers' Paul Meade was sceptical that Fyffes would be able to match its guidance for the full year.
"Fyffes' guidance is based on normalised H2 markets, especially from a supply perspective and assumes some improved pricing momentum. We see the company fully challenged in delivering the 24pc H1 EPS shortfall in what is traditionally the seasonally weaker trading period," he said.
Aiden O'Donnell of Davy stockbrokers said that depending on market conditions, Davy may increase their guidance for the rest of the year.
"Given that market conditions have -- according to the company -- normalised, [our forecasts are] likely to be achievable and hence there may be scope to move numbers upwards."