Strong European banana prices helped Fyffes to deliver record profits last year, but the firm has warned of tougher conditions in 2006.
The fruit distributor said adjusted pretax profits had come in 33.6 per cent higher than 2004 at €121.8 million. Revenues, including the sales of joint ventures and associates, climbed by 11.3 per cent to €2.17 billion.
The results featured a €12.3 million charge relating to the DCC insider-trading litigation, bringing Fyffes's total costs on this to €17.6 million. DCC's costs accounted for €7.5 million of this.
This €12.3 million charge, when combined with a number of other exceptionals, reduced unadjusted profits to €105.8 million, up 27.9 per cent on the equivalent 2004 figure.
Fyffes chairman, Carl McCann, described the 2005 performance as "excellent" and confirmed that the company would pay out a €20 million special dividend.
Mr McCann also said the firm had been trading "broadly in line with expectations" so far in 2006, but he acknowledged that this took into account a €55 million increment in costs due to a radical change in the EU banana import regime and higher transport costs. Mr McCann said the firm would be doing its best to pass on the €40 million additional cost due to the tariff change. NCB analyst Paul Meade is dubious, however, judging that the firm will be able to recover less than €25 million. Mr Meade has reduced his 2006 forecasts for Fyffes to reflect this.
Mr McCann flagged growth in the "low single digits" for the company's dominant produce division this year , but said acquisitions could boost this, as they have done in previous years.
The company has considerable firepower for large acquisitions, with net cash increasing from €152.1 million to €170.9 million over the course of last year.
The 2005 numbers were boosted by a first-time contribution from Everfresh in Sweden, of which Fyffes bought 60 per cent in May. A breakdown of last year's exceptionals showed that as well as the €12.3 million charge relating to the DCC case, Fyffes took a charge of €5 million for another legal case. This claim, from the Merchant Navy Officers Pension Fund, was inherited by Fyffes in an acquisition.
Mr McCann said the firm had not yet decided on whether or not to appeal the verdict in the DCC case.
The firm also recorded an €11 million gain on a change in the way it accounts for investment properties and a €2.4 million charge on non-investment properties. Fyffes is in the process of spinning off the bulk of its property interests into a standalone company, Bluestone.
As well as the special €20 million dividend, Fyffes will pay a final dividend of 5.20 per share. When added to the first-half payout of 1.69 cent, this brings total dividend for the year to 12.61 cent, up 87.4 per cent on 2004.
