Total Produce’s acquisitions drive 19% H1 profit rise

August 30 , 2018

Ireland-based Total Produce notched a 19.4% rise in pre-tax profit to €42.3 million (US$67.5 million), thanks in part to the incremental contribution of its acquisitions.

The group’s total revenue rose by 1.8% to €2.19 billion (US$3.5 billion) while EDIBDA increased by 7.4% to €56.7 million over the six months ended June 30.

The performance also came despite challenging conditions in Europe due to unusual weather patterns and despite the weakening of the U.S. and Canadian dollar against the euro.

Total Produce said it had delivered “good” performance over the period, while chairman Carl McCann highlighted the “continued first-half growth.”

Mixed picture for regional segments

In the company’s eurozone segment – which includes France, Ireland, Italy, the Netherlands and Spain – revenue fell by 3.2% to €874 million.

“Overall trading conditions were challenging in certain countries due to unusual weather patterns as highlighted earlier which had an impact on supply and demand. This was offset by good performance in Southern Europe,” the company said.

There was also a slight fall in revenue of 2.4% to €781 million in the non-eurozone segment, which includes the Czech Republic, Poland, Scandinavia and the U.K.

“This was due in particular to the adverse impact of the translation of the results of foreign currency denominated operations into Euro due to the weakening of the Swedish Krona by 5.9% and Sterling by 2.0% and the impact of the unusual weather patterns as highlighted earlier,” it said.

“This was offset in part by the contribution of bolt-on acquisitions in the past twelve months.”

However, in Total Produce’s international business – which includes North America and India – revenue increased by 18% to €556 million, thanks in part to  the “incremental contribution of acquisitions.”

“On 1 March 2017, the Group acquired a further 30% of the Oppenheimer Group (‘Oppy’) taking its interest to 65% and from this date it was fully consolidated as a subsidiary,” it said.

“Previously the original 35% shareholding was equity accounted for as an associate interest. In addition there was the incremental benefit from The Fresh Connection acquisition in October 2017.

“This was offset in part by the weakening of the US Dollar and Canadian Dollar in the period by 11.5% and 7.0% respectively which negatively impacted the results on translation to Euro.”

Berry and soft fruit volumes in the international segment decreased in the period, compensated by increased pricing. The company said that in the prior period the berry and soft fruit market had been impacted by weather conditions that led to surplus volumes and lower pricing.

Oppy also incurred start-up losses in a new soft fruit growing partnership in the prior period, it said.

Investment in Dole

On Feb. 1 this year the group announced that it had entered into a binding agreement to acquire a 45% stake in Dole Food Company for US$300 million. The acquisition of the First Tranche completed on July 31.

Total Produce says that under the agreement it has the right, but not the obligation, to acquire up to an additional 6% of Dole common stock. However, it says it has “no present intention” to exercise this option, which would bring the total consideration to US$312 million.

Following the second anniversary of the closing of the First Trance, Total Produce will be able to acquire the balance of Dole common stock.

“From the fifth anniversary of completion of the acquisition of the First Tranche, in the event the Group has not exercised its right to acquire 100% of Dole, Mr. David H. Murdock is permitted to cause a process to market and sell 100% of Dole common stock,” it said.

Dole’s board of directors will comprise six members, three of which are appointed by Total Produce and three by Murdock. 

Murdock will remain chairman of Dole and McCann will be appointed vice chairman. Major decisions will require the consent of at
least one board member appointed by each of Total Produce and Murdock.

McCann said: “The 2019 financial year will be the first full year reflecting the scale of this transformative transaction. The conclusion of the Dole transaction represents a very significant development in the Group’s successful expansion strategy.”

 

 

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