Total Produce maintains earnings target

Total Produce, the fruit, vegetable and flower distributor, has reported a 2.3 per cent fall in pretax profits to €24.3 million for the six months ending June 30th.

The company, which was spun out from Fyffes, has maintained its full-year adjusted earnings per share target in the range of 5.5 to 6.5 cents.

In the first half adjusted earnings per share fell 0.7 per cent to 4.06 cent while revenues rose 1.2 per cent to €1.3 billion.

Chairman Carl McCann said the company was also maintaining its interim dividend of 0.54 cent per share. He said the company had concentrated on costs to allow it meet its targets.

On a divisional basis the produce unit reported a 2.8 per cent rise in revenues to €1.25 billion, despite what the company described as challenging trading conditions.

While overall volumes were up on the same period last year, this was due to the contribution from acquisitions in the second half of 2008. On a like-for-like basis volumes dipped.

The company said that the strengthening of euro by 13 per cent against sterling over the period had lowered the euro value of revenues earned in Britain.

“Competitive trading conditions” in Ireland had led to a fall in revenues from the company’s consumer foods and healthfoods division, the company said.

During the first six months of the year Total Produce invested €2.7 million in a bolt-on operation in Europe and a further €2.5 million in new and existing joint ventures, including a 50-50 joint venture stake in ASF Holland.

Total Produce said it had also increased its shareholding in South African fruit exporter Capespan to 15.6 per cent.

Adjusted earnings before interest, taxes, depreciation and amortization were down 4.7 per cent at €26.3 million. Operating profit fell to €22.3 million compared to €24.8 million in the first half last year.

The size of the company’s pension deficit, net of deferred tax, increase by €2.3 million at the end of 2008 to €16.8 million by June 30th.

Net debt at the end of the first half was rose by just over €2 million to €82 million compared with June 2008.

The company said it would consider a share buyback “if the appropriate opportunities arise”.

Shares in the company were flat at 39 cent in Dublin at 2.30pm, but are up almost 50 per cent so far this year.

Brokers described the results as resilient in the context of difficult consumer markets and noted the company was strongly cash generative.

Goodbody analyst Killian Murphy said the fact that the company had yet to embark on a share buyback was a positive, leaving it well-placed for attractive acquisitions in the future.