Mushrooms buoy Fyffes profit as bananas slip

Fyffes’s profits rose 11.3 per cent in the first half, buoyed by the acquisition of a Canadian mushroom business in March as the the contribution from bananas – its oldest business – fell.

The tropical fruits distributor said earnings before interest, tax, depreciation and amortisation (ebitda) rose to €44 million from €39.5 million for the same period last year. It affirmed its full-year guidance for ebitda to grow to between €63 million and €69 million from €56 million in 2015, even amid unfavourable currency fluctuations so far this year.

“The result for the first half of the year was satisfactory given the difficult prevailing market conditions, including adverse currency movements as a result of the weakness of sterling and of the euro against the US dollar,” said chairman David McCann.

Challenging conditions

Fyffes said banana trading conditions were "challenging" in the first half as the dollar strengthened against sterling and the euro.

“In response, Fyffes has secured some price increases to date but this has been insufficient to offset the impact of the adverse exchange rates and the group therefore continues to pursue further price increases in all markets,” the company said, adding that lower fuel prices have helped cushion the impact.

Mr McCann told earnings in the bananas business fell during the first half, but declined to given any figures. Volumes of banana sold grew by a “satisfactory mid-single digit” percentage.

Pineapple volumes increased by “strong mid-teens in percentage terms”, while those for melons surged by more than 20 per cent as a result of the successful integration of additional farming assets in Guatemala which it bought in late 2015.

Fyffes raised its earnings guidance at the end of April as it factored in the benefit of its €99 million purchase of Canadian mushroom company Highline Produce.

Resilience

"[The] results illustrate the more resilient nature of the Fyffes business," said Patrick Higgins, an analyst with Goodbody Stockbrokers. "The foreign-exchange-driven volatility in the banana business was broadly offset by its two other [tropical fruit] categories. This has been diversified further through the acquisition of Highline."

Meanwhile, Mr McCann said Fyffes, which missed out on a proposed $1 billion merger with rival Chiquita in 2014, is continuing to look at potential acquisition opportunities in each of its four business categories. He reiterated that the company could comfortably spend up to €100 million on deals.

“There’s always ideas floating around and there’s always ideas we’re playing with,” declining to say whether the company is currently actively pursuing a specific transaction or when it might carry out one.