Fyffes pretax profits up 33%

FRUIT IMPORTER Fyffes shook off higher costs and unfavourable currency exchange movements to achieve a 33 per cent rise in pretax profits in 2009.

But the company has warned of difficult trading conditions in the first two months of 2010 and yesterday it revised down its earnings expectations for the year ahead.

Pretax profits increased from €15.9 million to €21.2 million, although total revenues including its interests in joint ventures were down 4.1 per cent to €726.8 million.

Group revenues excluding the firm’s share of joint ventures totalled €598.1 million, down 1.4 per cent compared to €606.7 million a year earlier.

The company’s 40 per cent share of the after-tax losses on property subsidiary Blackrock amounted to €27.9 million. Including the Blackrock losses, exceptional items and its share of joint ventures, the group operating loss was €11.8 million.

Fyffes chairman David McCann described the 2009 figures as “a strong result” and the best since changes to European banana import regulations were introduced in 2005.

“The group achieved the necessary increases in selling prices to offset the negative impact of higher costs and adverse exchange movements in 2009,” he said.

Adjusted earnings before tax and write-offs rose 35.7 per cent over the 12 months from €15.3 million to €20.7 million, while net funds increased from €32.2 million to €36.6 million.

The company is proposing a final dividend of 1.65 cent as against 1.50 cent in 2008. Banana selling prices were higher during the year, offsetting lower volumes, while Fyffes made small profits from its pineapple trade, and profits on its melons business fell.

Mr McCann said trading conditions had been difficult in 2010 as a result of the impact of the prolonged period of cold weather on demand and pricing, while the strengthening of the US dollar had also had an adverse effect.

The Fyffes chairman said it was “appropriate and prudent” for the company to revise the group’s targets for 2010. It now expects adjusted earnings before tax and write-offs to be in the range €14-€18 million – its original target for 2009. The target is conditional on the group securing selling price increases for its products across all of its markets.

The company’s comments yesterday echoed remarks from other fruit companies such as Chiquita, Fresh Del Monte and Dole, which have all indicated a challenging start to 2010, analysts from Bloxham Stockbrokers noted.

Analysts at Davy reduced their forecasts for Fyffes in light of its lower earnings, while Goodbody analysts also flagged a revision.

Fyffes, which is listed on the Irish Stock Exchange’s IEX index, had a closing share price of 42 cent yesterday, unchanged on the previous day.