The Port of Portsmouth believes its decision to take over leading banana importer Mainland Market Deliveries (MMD) will pay long-term dividends for the southern English authority, despite the firm recording a €6.7m (£6m) loss.
In an internal report to Portsmouth City Council seen by Fruitnet, Portsmouth port manager Martin Putman said the decision to purchase MMD in February last year had been necessary to prevent the company going into administration with the potential loss of large numbers of jobs.
However, the report revealed that the situation at the time of the takeover had been “worse than had been expected”, with the financial structures and infrastructure in a “particularly poor state”.
MMD’s year-end accounts, Mr Putman continued, had shown a loss of almost €6.7m (£6m) for the year 2007/08, which was nearly €2.8m (£2.5m) more than had been estimated by the previous management, Sandpiper.
Portsmouth councillor Mike Hancock told the regional Portsmouth News that if the council had not taken over MMD, it would have meant job and trade losses from which the Port of Portsmouth would have found hard to recover.
“It would have finished Portsmouth as a commercial port,” he said.
The port authority said that in order to restore the function and efficiency of MMD’s operations, “considerable improvements” had to be made to the infrastructure, while the extend and cost of this work was greater than expected.
In particular, Mr Putman revealed that MMD’s packhouse facility had not been profitable for some time and so had been transferred in October last year to the management of Premier Direct Marketing. This, he said, would provide a rental income and help existing customers, such as Fyffes, save on transport costs.
Since the takeover, Mr Putman said that the performance by MMD’s workforce at the quayside operations had improved, while volumes had also increased through the introduction of a new banana service for Fyffes from Belize.
Although Mr Putman admitted that customers had been “cautious about the change of ownership”, he said that the improvements in the service had led to more enquiries for future business.
The port manager said volumes of bananas from Central America, as well as other fresh produce from Morocco, had been “better than expected”.
Mr Putman added that although the business was likely to suffer a further net loss this year, the situation was expected to improve by 2010 and progress further in future years.
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