Fyffes first-half pretax profits increase by 124%

FRUIT IMPORTER Fyffes has reported a 124 per cent rise in first-half pretax profits to €35.1 million on the back of higher prices introduced to offset rising costs.

For the six months to June 30th sales rose by 5.6 per cent to €302 million compared with the same period last year with the company saying this was largely due to higher selling prices.

The results include a net payment to Fyffes of €37.6 million following the settlement of its insider dealing litigation against DCC. This was a net exceptional gain of €33 million after fees and costs.

Fyffes chairman David McCann warned the outlook for the second half of the year has "deteriorated". "This results from further increases in the cost of fruit, combined with a significant strengthening of the dollar against the euro and sterling," he said.

While Mr McCann noted "some improvement in year-on-year average selling prices", he said this was not meeting the impact of "substantially higher costs". As a result the company would seek to raise prices in all markets to "offset the unprecedented level of cost inflation".

Mr McCann said the group's target-adjusted Ebit for 2008 has been lowered to the €12-15 million range compared with €17.4 million last year. This implies a second-half trading loss.

Shares in Fyffes plummeted over 30 per cent on August 29th when it first announced it had lowered its profit forecast. The company said costs have increased further in recent weeks, particularly for fruit procurement, leading to an expectation that input costs will rise by 20 per cent.

Other exceptional costs include fees of €0.8 million in relation to an ongoing EU competition investigation and €0.3 million in relation to unsuccessful acquisitions.