Fresh produce company Total Produce has revealed the negative impact that a recent strengthening of the euro had on its income in non-euro markets such as the UK and Scandinavia during the past year.
Publishing its preliminary results for 2009, the company announced a 10 per cent fall in net profit to €19.2m on the back of a 3.3 per cent downturn in total revenue to €2.43bn.
During the course of the year, the group's fresh produce division saw its revenue decline by 1.9 per cent to €2.33bn, primarily due to the strength of the euro, which meant earnings in non-euro currencies were worth less on conversion back into euros than they would have been in 2008.
Like-for-like volumes and average selling prices were also 'marginally lower' as a result of the strong euro, the company said in an official statement.
'These decreases were offset by the full-year contribution of acquisitions made in the second half of 2008,' the statement continued.
The group also pointed out that its fresh produce revenues for 2009 actually represented an increase of 2.4 per cent on a constant currency basis.
Revenue in Total Produce's Consumer Goods and Healthfoods Distribution division, which represents 4 per cent of its revenue, decreased by €40m to €106m.
With annual adjusted pre-tax profits also down slightly at €40.1m, the company nevertheless saw its total income for the year jump to €33.0m from a loss of €7.5m in 2008 thanks to net gains in its foreign currency investments via subsidiaries and joint ventures.
Foreign currency borrowing, however, slipped from a €10.7m gain in 2008 to a loss of €4.3m over the past 12 months.
Adjustments in the group's pension scheme set-up, meanwhile, delivered a net saving of €2.9m compared with €18.4m lost in the previous year.
Cold comfort
Commenting on the results, company chairman Carl McCann said the results represented a strong response to the recent economic chills.
'The Group has delivered a resilient performance in 2009 against the background of a challenging economic environment and adverse currency movements,' he said. 'The adjusted earnings per share of 6.47 cent is at the higher end of previously announced earnings target range. The total dividend for the year is unchanged at 1.69 cent per share.'
Heading into 2010, extremely cold weather and heavy snowfalls throughout most of Europe have resulted in a slow start to the year by keeping consumers at home and temporarily reducing demand, Mr McCann reported.
'However, Total Produce remains positive about its position as one of the leading fresh produce companies in Europe with the benefit of a good spread of activities throughout the region,' he insisted.
'The group is in a strong financial position and continues to pursue attractive acquisition opportunities,' Mr McCann added.
Across Europe
According to the company's statement, the trading environment in certain parts of the Eurozone had been 'challenging' during 2009 as a result of the economic downturn.
Revenue in the region grew €83m to €1.2bn last year, it was revealed, with adjusted EBITA increasing by €4.2m to €23.4m, due mainly to the full-year contribution of the company's acquisition of Dutch companies Haluco and Nedalpac – completed in the second half of 2008.
This was reportedly offset by a decrease in like-for-like revenue in some of the group's key European markets, due to a marginal decrease in both volumes and average selling prices.
In Scandinavia, the company said its subsidiaries had performed well and had been helped by the ongoing integration of its businesses in the region.
But the strengthening of the euro by 11 per cent against the Swedish krona led to an 8 per cent decrease in revenue, from €600m to €550m, it revealed.
The company's UK fresh produce division, meanwhile, reportedly delivered a resilient performance despite difficult trading conditions and the adverse weather in December.
'During the year, this division continued to concentrate on developing its soft fruit business,' the company noted.
Revenue in local currency remained flat year-on-year, according to the report, with the contribution of acquisitions made in the second half of 2008 and the first half of 2009 offset by a slight decrease in both like-for-like volumes and average selling prices.
However, the 11 per cent weakening of the British pound did lead to a 10 per cent decrease in revenue when converted back to euros, the company admitted.
Elsewhere, adjusted EBITA for 2009 in Total Produce's other fresh produce businesses fell by €1.6m to €3.1m, primarily due to the weak performance of the group’s South African farm investments.
Downloads:
Total Produce 2009 Preliminary Results Presentation
Total Produce 2009 Preliminary Results
