Fyffes shares shed 3% as summer heatwave hits demand

Shares in Fyffes shed almost 3 per cent yesterday after the company said the summer heatwave would cost it some €8 million in third-quarter operating profits.

The fruit distributor warned that the exceptionally hot weather had made a "material impact on consumption" in July and August, and had thus hit demand for its products.

Fyffes shares closed 4 cents lower at €1.45 last night as analysts looked at reducing their full-year earnings forecasts for the firm to reflect the expected profit shortfall.

The weather warning was contained within first-half numbers that were broadly in line with market expectations.

Pre-tax profits rose by almost 9 per cent to €42.3 million, while turnover grew by 9.5 per cent to €1.02 billion as two European acquisitions made by the firm last year made their first full contribution to results.

Profits at the operating level were 11 per cent higher at €40.6 million, as the expansion of the group helped to offset harsh trading conditions within its banana division.

Fyffes vice-chairman, Mr Carl McCann, said he expected this market to improve and indicated that the negative weather impact on demand was diminishing as September progressed.

Mr McCann was upbeat on the company's plans for future development, highlighting the firm's capacity to fund large acquisitions worth upwards of €100 million.

He declined to comment on particular targets for add-on growth but did not rule out global players.

The company has been cited in the past as a possible buyer for rival banana firm, Chiquita.

Fyffes also looks set to expand its property interests, which include a 50 per cent joint venture with Northern firm, Lagan Investments.

This operation won planning permission over the first half for a 300,000 sq ft town centre development on its lands at Dundalk, Co Louth.

Mr McCann said Fyffes had not yet considered how its future engagement with the project would develop.

The group meanwhile realised a pre-tax profit of €1.65 million through the sale of properties in Italy, the UK and Ireland over the first six months, with a further €6 million raised on other property transactions since then.