Fyffes improves year-end expectations

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Fyffes improves year-end expectations

Irish fruit company Fyffes reported a 6.4% increase in revenue for the first half of 2013, up to €585.4 million (US$768.2 million) from €550.1 million (US$721.9 million) in the first half of 2012.FyffesProducts

The increased revenue came with a higher target EBITA, influenced in part by strong trade conditions, chairman David McCann said.

"Having achieved a significant step up in profits in 2012, Fyffes is pleased to have grown its business further and consolidated its earnings at this higher level in the first half of 2013.  Trading conditions have remained positive in the early months of the second half.

"The Group is increasing its target EBITA range for the full year 2013 from €27m-€33m [US$35.4 million-US$43.3 million] to €29m-€34m [US$38.1 million-US$44.6 million], compared to €30.5m [US$40 million] in 2012," McCann said in a public statement.

Sales for the company grew, attributed to organic growth in bananas and melons, and price inflation in pineapples. Melons, however, brought in lower average prices. The company also felt pressure from exchange rates for sterling and U.S. dollars.

With a 1.3% increase in Adjusted EBITA to €23.1 million (US$30.3 million), the company highlighted continued momentum from higher operating profits from tropical produce in 2012.

Total operating profits, including amortization and joint ventures tax charges, grew 1.7% to €21.5 million (US$28.2 million).

"The key drivers of the Group’s short term performance in its tropical produce operations, and its banana category in particular, are average selling prices, exchange rates and the costs of fruit, shipping and fuel, all of which can result in volatility in year on year profitability," the company said.

Winter weather in Europe and excessive volume created trade complications for bananas early in the year. Weather complications in Latin America brought volume back down, however, and improved market conditions in continental Europe in recent months.

For pineapples, supply stability brought higher operating profits. The company noted that more fruit now comes from its own farms in Costa Rica.

Good weather, particularly in Guatemala, gave a boost to melon performance on the U.S. market and drove the company as a top supplier of the fruit.

Overall profit before taxes grew 1.1% to €22.2 million (US$29.1 million). Diluted earnings per share grew 0.2% to 6.36 cents.

Fyffes made a note to disassociate itself from further losses from Balmoral International Land Holdings plc, in which the group has a 40% shareholding.

"[Financial results for Balmoral] showed a further reduction in its net assets, with the Group’s share amounting to €0.4m [US$525,000).  Fyffes wrote down its investment in Balmoral to €50,000 [US$65,515] in 2011.  As a result, Fyffes does not recognise any further share of Balmoral’s losses while the Group’s share of its net assets exceeds this €50,000 [US$65,515] carrying value," the company said.


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