Fyffes profits increase 7% despite fall in turnover due to disposals

Fyffes reported better-than-expected results for the past year, despite experiencing what it describes as "challenging market conditions" in 2002.

The fresh fruit distributor posted a 7 per cent rise in profits before tax, goodwill and exceptional items to €68.1 million. However, turnover slipped by 6 per cent to €1.84 billion, reflecting the disposal of a number of businesses over the past two years.

The sales figures included a six-month contribution from Hortim, the Czech distribution business acquired last summer.

Hortim had sales of €60 million in the second half but incurred a €0.7 million loss in the period.

"The business was affected by the severe flooding in the Czech Republic. We are hoping for better things there in 2003," vice-chairman Mr Carl McCann said.

Overall, operating profits were up by a modest 3 per cent to €63.3 million while margins rose to 3.4 per cent from 3.1 per cent.

Fyffes' Irish and UK operations accounted for €26.8 million of operating profits, while the continental European operations contributed €36.5 million or nearly 58 per cent of the total, something Mr McCann said was likely to continue "into the future".

The company said the performance of its banana division was similar to 2001. A weaker dollar boosted the results by around 3 per cent but Fyffes said there was a continuing need for local currency pricing to improve to counteract increases in the cost of raw materials, insurance and shipping due to the higher oil price.

Meanwhile, its produce division was marginally weaker than in 2001 and continues to present challenges. However, Fyffes said it was "well placed to compete in the current environment and to take the business forward".

Adjusted earnings per share were up by 12.8 per cent to 14.17 cents per share, ahead of analysts expectations. The company said it would pay a full-year dividend of 5.203 cents per share, an increase of 10 per cent.

At the end of the year, Fyffes has net cash of €166.8 million, a 10.7 per cent increase on the previous year, leaving it in a strong position to fund acquisitions.

Fyffes declined to comment on recent speculation that it may be interested in Chiquita but remains on the lookout for suitable companies to buy.

"There are not that many big deals out there and the probability of a big deal happening is low rather than high," Mr McCann said. "We will probably end up doing medium-sized deals."

Mr McCann would not comment on the progress of its legal action alleging insider dealing against former shareholder DCC and its chief executive, Mr Jim Flavin.

Fyffes shares closed unchanged last night at €1.28.