Tropical fresh produce importer and distributor Fyffes has posted adjusted earnings (before interest and tax) for 2008 of €15.3m, compared with €17.4m during the previous year.
The group said the result represented a slight improvement on its target figure and market expectations, despite what it described as an 'unprecedented' level of cost inflation that saw the costs of fruit, shipping and, in particular, fuel all increase substantially compared with the previous year.
However, the adjusted figure does not include Fyffes' 40 per cent share of the 2008 results posted by real estate company Blackrock International Land Plc, which included an after-tax loss of €28.6m, against a profit of €4.5m in the previous year. The fall in earnings reflects the approximately 35 per cent reduction in the net value of Blackrock's property portfolio as at 31 December 2008.
Nevertheless, Fyffes' fresh produce business remains robust, according to chairman David McCann, who confirmed that the company would continue to target adjusted earnings in the range of €14-18m for 2009.
“Fyffes’ profits for 2008 were slightly ahead of target and market expectations, notwithstanding the unprecedented increases in the costs of fruit, shipping and fuel experienced by the industry during the year,' he commented. 'After a slow start to the year, pricing has improved in recent weeks and the group’s target for the year remains unchanged. In this difficult economic environment, Fyffes’ products represent excellent value for money and we believe consumption will remain strong.”
Total turnover for the year, including the group’s share of revenue of its joint ventures, amounted to €758.2m, up 7 per cent on the figure for 2007.
Group revenue in 2008 amounted to €606.7m, up 9.6 per cent on the previous year, and mainly reflecting the first-time contributions of a number of businesses acquired early in the year, including Sol Marketing Group, an importer of winter season melons into the US market.
The higher revenue also reflected higher average selling prices in Fyffes’ key banana category, on relatively flat volumes year on year, the company said.
According to Fyffes' published statement, the impact of substantially higher costs during 2008 was mitigated by more favourable average exchange rates, due to the relative weakness of the US dollar for much of the year.
In addition, the group sought and achieved increases in selling prices in all markets, it said. 'However, the level of price increases secured was insufficient to offset the impact of the higher costs and, as a result, adjusted earnings (before interest and tax) in the group’s banana category declined by €6.2m in the year,' the company reported.
Fyffes’ pineapple business, meanwhile, delivered a small profit in 2008, in line with the previous year. 'As previously indicated, climatic factors caused an oversupply of product in the marketplace during the first half of the year and reduction in supply during the second half.' said the company. 'This had a negative impact on selling prices and costs over the course of the year. The group’s pineapple farming operations in Costa Rica achieved a significantly improved result in 2008.'
In Fyffes’ winter melon category, its share of losses in Nolem was somewhat lower than in the previous year, although it admitted that the business 'continues to face significant challenges'.
However, Fyffes’ US winter melon business made a satisfactory first-time contribution during 2008, the company reported, and, as a result, the group’s combined winter melon operations achieved a €3.4m improvement in operating profit year on year.
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