Fyffes cuts earnings forecast despite hike
A decision by fruit importer Fyffes to lower its earnings forecasts for 2010 yesterday took the sheen off a set of results that showed a 33pc jump in pre-tax profits to €21.2m for 2009 as the company boosted prices to offset higher costs and adverse currency moves during the year. Turnover at the fruit importer for the period declined 4.1pc to €726.8m, while earnings before interest and tax (EBIT) were almost 36pc higher at €20.7m.
Fyffes' executive chairman David McCann said the performance was the company's best since the EU reduced tariffs on imported bananas following complaints made to the World Trade Organisation.
But Mr McCann cautioned that trading conditions have been difficult in the first two months of this year, as a result of cold weather in Europe which has hit demand and pricing, and a strengthened dollar.
"While it is still early in the year, it is appropriate and prudent to revise the group's target EBITA for 2010 to reflect the difficult start," said Mr McCann.
He added that Fyffes was now targeting adjusted EBITA for 2010 in the range of €14m to €18m. That's down from the €17m to €22m range the company issued in January, while the revised figure was the group's original target for 2009.
"The group must achieve increases in average selling prices in all markets to offset the impact of unfavourable exchange rates and higher industry costs," said Mr McCann.
Group revenue at Fyffes, which excludes revenue earned from its 40pc stake in Blackrock International Land, dipped 1.4pc last year to €598.1m. Fyffes' share of losses in Blackrock, which released results earlier this week, was €27.9m in 2009. Share in Fyffes closed at 44c yesterday down 2c.
Blackrock has suffered heavily after the overall value of its property investment assets fell sharply.
Analyst Killian Murphy at Goodbody Stockbrokers said Fyffes results were slightly behind the broker's earnings per share forecasts, at 5.2 cent, although adjusted earnings before interest, tax and amortisation were slightly ahead.
Shares in Fyffes closed yesterday at 42c down 2cent.