Fyffes records €8M profit hike
Even if it weren't for exchange rate benefits in 2015, Ireland-based fruit company Fyffes Plc (ESM:FFY) still had underlying revenue growth of 7% for the year, driven mainly by volumes in its banana and melon categories.
In a results announcement today, Fyffes said EBITDA was up 16.4% at €56.1 million, representing the group's seventh consecutive year of earnings growth.
The currency benefits came mainly from the translation of a weaker euro on its U.S. dollar and Sterling denominated sales.
As the top melon importer in the United States, the group's volume of the fruit was buoyed by acquisition activity in Guatemala, offsetting what was a challenging season that put profit under strain when compared to 2014.
"There was adverse weather in the early part of the year in the production regions which increased costs and resulted in some quality issues in certain varieties for part of the season. This had a modest adverse impact on average selling prices," Fyffes said.
"Towards the end of the year, the Group purchased additional melon farming assets in Guatemala which contributed to a mid-single digit increase in volumes in this category in the year and is expected to result in a 25% increase in volumes on a full year basis in 2016.
"Fyffes is pleased with the initial integration of these new farms and there has been a positive start to the 2015/16 US melon import season."
In its home continent, Fyffes is the leading importer of bananas - a category that delivered a "strong result" for the year.
"Fyffes achieved a strong result in the banana category in 2015, with a mid-teens percentage increase in operating profits," Fyffes said.
"This was delivered despite a significant currency headwind, with the US Dollar strengthening by 16% and 7% against the euro and Sterling respectively during the year.
"The impact of this was partly mitigated by reductions in key input costs, further logistical efficiencies combined with lower fuel costs, operational efficiencies in the Group’s distribution network and reductions in other import costs."
Fyffes was able to secure selling price increases for bananas in some markets while continuing to grow its European share.
It was a similar story in pineapples, combined with prices getting pushed up due to supply constraints in Costa Rica.
"Fyffes total volumes were marginally lower for this reason, although production on the Group’s own farms was slightly higher as a result of further yield improvements.
"Costs, particularly logistics and fuel, were lower year on year."
In its outlook statement, Fyffes said it was focused on consolidating at its higher level of earnings.
"The Group’s initial target EBITA for 2016 is in the range €42m-€48m, compared to €45.8m in 2015. Fyffes is pursuing increases in selling prices in all markets in response to the continuing strength of the US Dollar against the euro and Sterling," the group said.
"Trading conditions have been satisfactory in the year to date in 2016. The Group remains focused on always improving the efficiency of its operations in order to enhance its competitiveness.
"Fyffes is determined to continue to grow its business and is actively pursuing a number of attractive acquisition opportunities."
Fyffes is also the third-largest pineapple industry player in Europe and the U.S., as well as the fourth-leading player in the U.S. banana market through a joint venture with Turbana Corporation.