Fyffes pre-tax profits dropped by 30 per cent last year, from €19.1 million to €13.2m, but things could have been worse.
Rising costs and increasing pressure in the banana category caused Fyffes to issue a warning to the market that its full-year results would be way below the previous year’s figure.
And despite a better than expected second-half performance, Fyffes chairman David McCann is still warning that "significant cost inflation experienced by the industry last year is expected to increase further in 2008".
Fyffes has ambitious plans to double its size by 2011, a target which McCann believes is still well in its sights. Fyffes is targeting a "mid single-digit percentage increase" in adjusted earnings before interest and tax this year, without taking into account the expected positive impact of its recent entry into the US winter melon market.
"The impact of significant inflation in the costs of fruit, shipping and particularly fuel during the year was mitigated by more favourable average exchange rates and higher volumes," the company said on releasing its results.
The European winter melon business reported a loss of €2.8m, mainly due to the under performance of Nolem, its Brazilian joint venture. The company’s pineapple business delivered a modest profit, slightly ahead of last year.
And following the successful Supreme Court appeal in its insider dealing case against DCC and others, Fyffes has written back a provision of €7.5m in respect of the defendant's costs. It is now waiting on the final decision to determine what share it will receive of the €84m profit DCC made from the share sale.
It is also awaiting the outcome of an EU investigation into the UK banana market.
"Progress has been made on a number of fronts and management is targeting an improved result in the current season," Fyffes said.
