Fyffes held back by strong punt

FYFFES, the Irish banana distributor, yesterday blamed the strength of the punt against sterling for depressed sales and operating profits last year. Carl McCann, deputy chairman, said that, with 80 per cent of the company's sales in the UK, the punt's recent devaluation would give Fyffes a boost this year.

The punt appreciated during the year to October 1992 from 92p to 109p, although last week's devaluation returned the two currencies to parity.

Despite higher volumes, sales were 14 per cent lower at Ir pounds 524m and pre-tax profits rose thanks only to a full year's benefit from a Ir pounds 60m rights issue in 1990. At Ir pounds 28.5m, taxable profits were 5 per cent higher than in 1991. The final dividend is Ir0.9p, giving a 10 per cent increase for the full year to Ir1.25p.

Mr McCann added that low produce prices had hit profits. He said fruit prices had fallen 25 per cent last year. Good growing conditions had resulted in oversupply worldwide, and in Europe there had been a glut of produce ahead of possible changes in quotas.

Liam Igoe, an analyst at the Dublin stockbroker Goodbody, said a new pan-EC regime from July would be likely to restrict imports, which could push up prices. That, combined with a more competitive punt, led him to forecast a 17 per cent increase in pre-tax profits for Fyffes this year.

Fyffes will also benefit this year from higher interest rates in Ireland. It currently has a cash pile of about Ir pounds 97m. Mr McCann said the company would use the money to expand, probably into Europe, but did not expect an acquisition soon.

Last year Fyffes failed to acquire a stake in Saba, a Swedish distributor, after it walked away from negotiations to buy half the company for Ir pounds 50m. Fyffes is also thought to have put in a bid for Del Monte, which was sold to a consortium backed by the Mexican government.