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Acquisitions boost Total Produce

The fresh produce supplier bought in most of its growth in the first half, but underlying growth was still a creditable 2 per cent.
September 4, 2015

Acquisitions and currency effects boosted first-half figures from fresh food company Total Produce (TOT). Without these, revenues would have risen 2 per cent. The eurozone business benefited from recovering prices in some markets - an important factor given the oversupply that drove prices down in 2014 - with revenues up 4.7 per cent at €833m (£607m). The non-eurozone business, which includes the UK, saw revenues rise 5.4 per cent to €767m, aided by the weakness of the euro against sterling.

IC TIP: Buy at 91p

This performance prompted management to announce it would target the top end of the previously announced full-year EPS range of 9.2¢ to 10.2¢. Half-year operating profits only rose 0.8 per cent to €27.2m, but this was in part due to a €2.5m exceptional gain last year on an investment in African Blue, a blueberry grower in Morocco.

Acquisitions appear to be a key part of Total's growth strategy. The company took a 50 per cent stake in Gambles Group, a Canadian fresh produce company, in February. Management said Gambles was one of eastern Canada's premier fresh produce companies, with 2014 sales of CAD$170m and over 280 staff. This was the fourth acquisition by Total Produce in North America since 2013.

Analysts at Goodbody expect full-year pre-tax profits of €44.9m, leading to EPS of 9.8¢, up from €41.9m and 9.5¢ in FY 2014.

TOTAL PRODUCE (TOT)
ORD PRICE:91pMARKET VALUE:£301m
TOUCH:90-92p12-MONTH HIGH:91pLOW: 75p
DIVIDEND YIELD:9.7%PE RATIO:14
NET ASSET VALUE:74¢*NET DEBT:29%

Half-year to 30 JunTurnover (€bn)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (¢)
20141.5924.24.764.0
20151.7324.24.773.6
% change+9--1+15

Ex-div: 17 Sep

Payment: 16 Oct

*Includes intangible assets of €168m, or 51¢ a share £1=€1.36