Ireland-based tropical fruit importer Fyffes has confirmed that banana prices during the first two months of 2011 were higher year on year, reflecting a decrease in volumes available from the world's main production areas.
However, costs – and in particular fuel prices – were also higher during January and February, the group added.
Announcing its annual results for 2010, the company revealed that it remained on course to achieve its current target of earnings before the deduction of interest, tax and amortisation expenses (EBITA) in the range €17m-€22m for 2011.
In a statement to the Irish Stock Exchange, Fyffes reported its adjusted EBITA for 2010 had come in at €21.3m, up 2.8 per cent on the previous year.
Adjusted profit before tax for 2010 also amounted to €21.3m, €0.1m up on the previous year reflecting the increase in adjusted EBITA and the reduction in net interest income.
Profit before tax, excluding a number of stated adjustments, amounted to €8.8m compared with a loss of €11.2m in 2009.
Total revenue, including Fyffes' share of its joint ventures, was 2.1 per cent higher in 2010 at €742.1m, it reported, while group revenue was 4.2 per cent higher compared with 2009 at €623.1m, due mainly to an increase in activity and volumes in the group's US melon business.
Revenue in the banana category increased modestly during 2010, it said, mainly due to the benefit of a more favourable average exchange rate for its sterling-based sales in the UK market.
'Banana volumes were broadly unchanged year on year,' the group said.
Commenting on the results, Fyffes chairman David McCann said: 'In the context of the exceptionally difficult trading conditions which persisted in the banana category for much of the first half of the year, this result represents a very satisfactory outcome for 2010.'
Bananas
The group’s performance in the banana category in 2010 was indeed adversely affected by the difficult market conditions which it said had persisted for much of the first half of the year.
'A combination of the prolonged period of exceptionally cold weather throughout Europe during the first three months of the year and excess market supplies during much of the first half resulted in a significant reduction in operating profits in the category,' it reported.
Banana profits were also significantly impacted by adverse exchange rates as a result of the relative strength of the US dollar against the euro and sterling during 2010, the company added.
'In addition, the group’s key input costs including fruit, shipping and fuel were all again higher in 2010, offset by the reduction in import duty.'
Market conditions improved during the second half of the year as import volumes reduced, it reflected. 'The group achieved necessary increases in selling prices in its key markets in the second half of the year, although this was insufficient to offset the shortfall in profits in the first half.'
Pineapples
As expected, the group produced a small profit in the pineapple category, slightly ahead of the previous year but affected by the same exchange rate pressures and development costs incurred at recently acquired farming operations in Panama.
'Trading conditions were broadly satisfactory in Europe during 2010 and Fyffes achieved an increase in profits on its marketing activities there.'
Fyffes’ US melon business made significant progress in 2010, the group reported, with expanded production activities in Central America enabling it to extend its import season and the procurement of US_grown fruit allowing it to begin supplying customers on a year-round basis.
'This resulted in a 25 per cent increase in revenues year on year,' it revealed. 'The business remained very focused on its cost base and as a result achieved a strong increase in profits in the year.'
Shares
Commenting on its recent share buyback, which saw Fyffes repurchase 17m of its own shares at a cost of €5.3m in November 2010, the group said it had returned total cash of €11m to shareholders in 2010, compared with €5.4m in the previous year.
