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Total Produce shares dip as firm reveals drop in sales for 2011

SHARES in Total Produce fell back yesterday as the company reported lower-than-hoped-for sales due to problems in its European markets.

The fruit company slid as much as 6.7pc during trading in Dublin after it said that sales last year fell 2.8pc to €2.53bn.

The difficulties in Europe stemmed from an E-Coli outbreak last May, which hit produce sales across the continent.

German authorities initially blamed the outbreak, which killed at least 49 people, on salad products. That claim turned out to be wrong but it hampered sales for months.

"The effects lasted longer than anticipated with the market slow to recover," Total said yesterday. "This had a negative impact on the group's fresh produce business and a lowering of general average prices."

Turnover fell in all three of Total's European markets -- the eurozone, the UK and Scandinavia -- mainly through currency fluctuations and lower average pricing.

Despite the soft sales figure, the company increased pre-tax profits by 2.3pc to €34.4m, while earnings per share climbed 5.8pc to 7.24c. A final dividend of 1.35c meant the full-year payout rose 6pc to 1.89c.

Acquisitions

Company chairman Carl McCann described the firm's performance as "solid". He added: "The group has performed satisfactorily, despite challenging conditions in certain markets due to the prolonged impact of the (E Coli) scare in May 2011.

"With the continued benefit of a good geographic spread of activities and the full-year impact of acquisitions completed in the second half of 2011, the group is targeting adjusted EPS for 2012 in the range of 7c to 8c per share," he added.

Net debt rose to €75.6m from €47.9m as Total spent €29m on small bolt-on acquisitions. The company has taken a 25pc stake in South African peer Capespan while also pursuing a number of smaller investments.

Analysts were broadly positive about the results but warned that the turnover target would likely be a drag on the company's performance.

"Undoubtedly, 2011 was an exceptional year given the difficulties that the E-Coli scare created," said Aiden O'Donnell of Davy Stockbrokers.

"We will need to get some comfort around a return to more normalised profitability here."

Goodbody's Liam Igoe added: "We would expect that there should be some upside (to 2012), given that full-year 2011 performance was attained against a difficult market background."

Shares in Total Produce closed down 2.39pc at 45c. That pared gains so far this year to around 18pc.

Irish Independent