Fyffes to be first to post full-year results in euros

Neil McCann will notch up a first next Monday when his Fyffes fruit distribution group will be the first Irish company to report full-year results in euros. Euros or pounds, the general consensus is that the Fyffes figures will show good growth from the previous year with pre-tax profits of around #75 million (or £59 million to the europhobes). Strong banana prices are likely to be the main factor behind the profits growth.

The arrival of the euro should be a boon to a company such as Fyffes where the best part of 70 per cent of profits are derived from the euro zone with Britain making up the difference.

In addition, the recent hurricane damage in Central America will have minimal impact on Fyffes as it does not own any plantations, something that cannot be said about major rivals Chiquita and Dole, which have seen plantations in Honduras devastated by Hurricane Mitch.

The festering row between the EU and the United States over access for "dollar bananas" to the European market has also had negligible impact on Fyffes, with a view in the market that, whatever solution eventually emerges from the long-standing dispute will have minimal impact on Fyffes, as it sources produce from both the ACP nations of the Caribbean and also the "dollar banana" nations of Central America.

Fyffes shares have been in good demand since the turn of the year, partly in anticipation of a decent set of results, and also in response to the deal announced just before Christmas which sees Fyffes invest £40 million for a 50 per cent stake in Capespan's European distribution operations and a 10 per cent stake in Capespan itself.

Given the timing of the announcement - when most in the market were more interested in their Christmas shopping, the Capespan deal has probably not got the attention it deserves. Fyffes already distributes Capespan's household name brands such as Outspan and Cape, and this 50 per cent equity stake and the 10 per cent stake in the parent company cements a relationship that some in the market believe could ultimately result in a takeover of the South African group.

Certainly, Fyffes has the financial wherewithal to expand its operation rapidly - whether that is in South Africa in a few years' time or through expanding its distribution operations in Europe. With free cash in the year to the end of October of around 25 million, Fyffes is likely to have net cash of around 110 million or not far off £90 million.