Fyffes has warned that oil-related pressures could add a further €15 million (£10m) to its annual cost base.
The Dublin-based fresh produce giant, with an annual turnover of €2.1 billion, added that it would not be able to absorb the additional costs and would need to pass the additional shipping and fuel costs on to customers, or cut payments to suppliers.
The news came as Fyffes announced a dividend of 5.72 per cent to shareholders, using €20m of its surplus cash after predicting an earnings increase of more than 25 per cent in the 12 months to December 31.
Much of the success was put down to the “exceptional performance” of its tropical produce division. “Market conditions, particularly for Fyffes’ tropical produce operations in continental Europe, have remained strong during the second half of the year,” the company said in a trading update.
“This has helped offset the significant cost inflation being experienced in the sector and, consequently, the group is on course to report another record performance this year.”
But the mood was dampened as Fyffes warned that this performance is unlikely to matched next year as the fresh produce industry faces “significant challenges“.
It estimated that EU plans to revamp its rules on banana imports will cost the company €40 million. The banana division accounts for the bulk of Fyffes’ annual profits.
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