Markets were unfazed by these impressive half-year results from Fyffes (FFY), though considering the huge upgrade to earnings guidance earlier in the summer, that's hardly surprising. True to its word, the fruit distributor managed currency headwinds by raising banana and pineapple prices. Coupled with favourable fuel costs and operational efficiencies, that yielded a 12 per cent rise in adjusted cash profits to €39.5m (£29m).
About 70 per cent of Fyffes' banana costs are incurred in the all-conquering US dollar, yet a sharp fall in fuel, import costs and operating expenses in UK distribution centres triggered a €2m (£1.5m) rise in operating profits from the group's primary fruit. Management implemented mid-single-digit price increases in the second quarter; it expects those to further boost profits in the second half of the year.
Elsewhere, the pineapple unit capitalised on supply chain constraints to increase prices and post operating profit growth of €0.9m. But earnings in the US melons business were flat as dismal weather conditions saw volumes fall and production costs rise.
A net reduction in working capital, together with just €4.9m in maintenance capital spending, pushed Fyffes back into the black. Management toasted the group's strong performance by hiking the dividend 15 per cent.
Broker Goodbody forecasts adjusted EPS growth of 19.5 per cent to 13.3¢ in 2015.
FYFFES (FFY) | ||||
---|---|---|---|---|
ORD PRICE: | 103p | MARKET VALUE: | £305m | |
TOUCH: | 101-106p | 12-MONTH HIGH: | 105p | LOW: 72p |
DIVIDEND YIELD: | 1.8% | PE RATIO: | 10 | |
NET ASSET VALUE: | 75¢ | NET CASH: | €18.6m |
Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
---|---|---|---|---|
2014 | 490 | 22.2 | 6.2 | 0.71 |
2015 | 541 | 30.8 | 9.1 | 0.82 |
% change | +10 | +39 | +47 | +15 |
Ex-div:10 Sep Payment:02 Oct £1=€1.36 |