Fyffes sees strong performance across the board in H1
Despite adverse exchange rate changes, Irish tropical fruit company Fyffes (ESM:FFY) delivered strong financial results for the first half of the year and saw EBITDA rise 12.5% to €39.5 million (US$44.4 million).
Total revenue, including the company's share of its joint ventures, increased by 8.7% in period to €644.3 million (US$742.6 million), which included the positive impact of translating Sterling and U.S. dollar-denominated sales into euro.
In late June the multinational increased its earning target for the year, in light of a strong first half performance. At the time the company said it expected to report an EBITDA of €55-61 million (US$62-69 million), compared to previous expectations of €44-50 million (US$50-56.7 million).
The most significant organic volume growth during the half came in the banana category, although Fyffes noted it had seen 'satisfactory' results in each product category, thanks in part to some price increases.
"The key drivers of performance in the Group's tropical produce operations are average selling prices, exchange rates and the costs of fruit, shipping and fuel," Fyffes said.
The banana category saw 'very satisfactory' results over the period, with operating profits €2 million (US$2.25 million) higher year-on-year. Fyffes said this result was achieved "notwithstanding the significant adverse change in exchange rates due to the strengthening late last year and early this year of the US Dollar against Sterling and particularly the euro."
"Offsetting this currency headwind, the cost of key inputs was lower including logistics costs, particularly fuel, other import costs and operating costs in the Group’s UK distribution centres," it said.
"Banana volumes increased modestly in the period due mainly to further organic growth by a number of key customers. Fyffes has also secured necessary price increases."
The company also achieved a strong result in its pineapple operations, with a €900,000 (US$1 million) increase in profit. Like the banana category, exchange rates were described as having a 'significant headwind' during the period.
In response, the group secured increases in average selling prices year-on-year, which were helped by supply constraints. Costs were also lower, particularly logistics and fuel, and overall yields on pineapple farms improved.
The U.S. melon business performed well in the first half too and achieved similar profits to the strong results seen in the first half of 2014. The company said this had been hard to do, given the prolonged period of poor winter weather experienced in the U.S. earlier this year.
"Weather issues in the production regions resulted in a slight reduction in total volumes in the period which also contributed to an increase in total production costs," Fyffes said.
"The Group secured a modest level of price increases in response. There was also a positive translation impact on these US Dollar denominated earnings."
Is should also be noted that when Chinese shares fell sharply on Monday this week and £60 billion (US$92.5 billion) was wiped of the index of the leading 100 U.K. shares (FTSE 100), Fyffes saw gains on its shares on the same index.