FRUIT IMPORTER Fyffes has raised its earnings target to €20 million this year amid improved market conditions across Europe. The move makes the firm the first Irish-listed company to raise its forecasts in almost two years.
Fyffes announced a 13 per cent jump in initial forecasts from €14 million to €18 million, with new estimates ranging between €16 million and €20 million.
The group said input costs, which were 20 per cent higher than last year, had been offset by favourable market conditions throughout the continent. Fyffes “achieved increases in average selling prices and has benefited from the positive impact of its currency hedging”, the firm said.
Bloxham Stockbrokers analyst Joe Gill said the statement amounted to a “13 per cent upgrade amid a firestorm in its core EU markets”. He said the upgrade reflected higher market prices as banana importers across Europe experienced price inflation due to supply constraints, weaker sterling and globally buoyant prices. Weekly data revealed UK banana prices were up 50 per cent year-on-year, and implied a positive earnings momentum in 2009, he added.
Goodbody Stockbrokers analyst Killian Murphy said the move, after the recovery of input costs in the UK, with better market conditions and the rise in average selling prices, could raise earnings per share from 4c to 4.5c.
John O’Reilly of Davy Stockbrokers highlighted the stock was trading at excellent value. “Notwithstanding the difficulty in forecasting too far ahead, this is dirt cheap for a business of its scale and share of the EU banana market,” he said. “The prospect of a certain cut in the duties it pays on banana imports, though the timing here is not known, adds to its attractions. Shares in Fyffes closed at 34 cent, up from 33.1 cent.
