Irish multinational Total Produce will continue to make new acquisitions over the coming months and years as it bids to maintain growth in its fresh fruit and vegetable business.
Commenting on newly published results for the first half of 2014, chairman Carl McCann said the group would maintain its recent strategy of expanding through investment in other companies and, in doing so, incorporate profitable new sources of revenue.
"Total Produce has recorded a robust performance in the first half of 2014 when measured against a particularly strong comparative period in 2013," he said. "The group continued to record volume growth in 2014, although average prices decreased in the period. The group's growth will continue to be driven by successful acquisitions."
As far as recent purchases go, the first half of 2014 proved to be a busy period for Total Produce. The group’s main investment was to secure a further 20 per cent shareholding in Dutch soft fruit company All Seasons Fruit, adding to an existing 50 per cent share in the company. Over the coming years, it plans to acquire the remainder of the business.
It also revealed it had acquired a 45 per cent interest in Eco Farms Investments Holdings, a California-based company which grows, markets and distributes avocados, citrus and exotics.
News of those investments were confirmed on the same day the group posted pre-tax profit of €24.2m (up 5.7 per cent) for January to June 2014, despite a 4.5 per cent fall in turnover to €1.59bn in the same six-month period.
The group indicated it was plaeased with its financial performance during the first half of the year, particularly when set against a background of what it said were “less favourable” market conditions, with group revenue largely in line with the first half of last year at €1.32bn and adjusted earnings before interest, tax and amortisation (EBITA) down 3.7 per cent to €30.2m.
Considering the fact that Total Produce was no longer generating revenue from its share in South African exporter Capespan, which it sold on 23 April 2013, the performance can be seen as a satisfactory one when measured against what was a particularly strong first half of last year.
As Total Produce pointed out, adverse currency conditions – including a strengthening US dollar against the euro – also had a negative impact on its results.
On a like-for-like basis, excluding the effect of divestments, acquisitions and currency translation, total revenue of €1.59bn was 1.7 per cent lower with some volume growth offset by average price decreases, it observed.
Greater production and excess supply in some key produce lines – for example stonefruit and melons – led to downward pressure on prices in the period, it added.
“The warmer weather in spring caused the domestic growing season to begin earlier, leading to greater production and oversupply resulting in downward pressure on prices particularly in some produce categories.”
As a result, revenue in the group’s Eurozone division decreased by 5.2 per cent in the period to €752m, with a 14.4 per cent decrease in adjusted EBITA to €11.0m.