Fruit distributor Fyffes has reported a 27.9% increase in pre-tax profits for the year to the end of December 2005, thanks to high banana prices. It said that trading in 2006 so far had been in line with expectations.
Beating forecasts, pre-tax profits rose to €105.8m last year from €82.7m in 2004 while revenues rose by 11.3% to €2.174 billion from €1.954 billion the previous year. Operating profits, before exceptional items, increased by 36.2% from €85m to €115.8m.
Adjusted to exclude amortisation and separately disclosable items, fully diluted earnings per share rose to 25.23 cent from 20.14 cent in 2004 - a gain of 25%. Basic earnings per share climbed 28.2% to 23.79 cent.
Fyffes said it is proposing to pay a final dividend for the year of 5.20 cent per share. The total dividend in respect of 2005 will amount to 12.61 cent per share, a jump of 87% on the 2004 figure.
The company had said in September that it was expecting percentage growth to be in the high teens.
'Fyffes has delivered excellent results in 2005, helped by very favourable market conditions in Continental Europe,' commented company Chairman Carl McCann. 'Reflecting this strong performance, the group has today paid the special dividend of €20m announced in December,' he added.
He said the company's preparations are well advanced for the proposed de-merger of some of the group's property assets into a new, separately quoted company, Bluestone Properties. Detailed documentation is expected to be sent to shareholders before the end of this month. The company said that Bluestone will have a capacity to further develop its portfolio and to pursue new opportunities on a significantly greater scale than it can currently.
Fyffes said its tropical produce division achieved a strong result last year, with operating profits up to €77.5m from 451.3m. This increase arose mainly in continental Europe, where market conditions were especially favourable due to positive supply factors. Fruit, shipping and fuel costs were higher last year than in 2004, although this was partly offset by a more positive exchange rate environment.
Operating profits in the group's general produce division amounted to €36.6m in 2005 compared to €31.6m the previous year. Fyffes said that market conditions for key categories were generally satisfactory, although volumes were slightly down on the previous year.
With regard to the recent High Court case Fyffes had initiated against DCC, the company said it has not yet received details of the costs which the defendants intend to claim. The company said it has provided €7.5m in respect of the defendants' costs. The company is currently considering where to appeal the High Court decision in the case.
Fyffes said that last year's EU decision to revise its system of regulating banana imports has resulted in a changed environment for the industry. It says that it is still too early to accurately assess the full effect these changes will have on the market. Fyffes has estimated that the increased import tariff is expected to increase duty costs for the company by about €40m a year.
Despite higher shipping and fuel costs, Fyffes says that trading so far this year has been broadly in line with the group's expectations.
'Fyffes remains ambitious to apply the group's substantial resources and management expertise in order to continue to develop its business organically and through further successful applications and alliances. The board is focused on enhancing shareholder value, as demonstrated by the property de-merger initiative,' the company said in its results statement.
Fyffes shares closed up 11 cent at €2.15 in Dublin.
