Shares in fruit importers Fyffes fell sharply yesterday, following a profits warning from the group's chairman. The euro's weak performance against the dollar has been cited as a significant factor.

While analysts were cautious about making significant adjustments to forecasts which already anticipate low profits and earnings growth this year, the comments about first-half trading from chairman Mr Neil McCann at the company's annual general meeting were sufficient to knock Fyffes shares back 60 cents to €3.70 in Dublin and back 35p to 165p sterling in London.

Even at these levels, however, Fyffes shares are still well above their mid-December level of €1.60. This was just before the announcement of worldoffruit.com, its Internet trading subsidiary, sent the shares spiralling as dot.com fever engulfed stock markets. Fyffes peaked at €4.00 last month.

Shareholders were told that the market for Fyffes' fresh produce in November and December had been difficult and well below expectations, and that the usual recovery in the first couple of months this year had been slower than expected. Fyffes, as a buyer of bananas in dollars and a seller in euros, was also affected by the weakness of the euro, down about 14 per cent against the dollar on this time last year.

As a result, half-year profits will be below last year's interim profits of €39.6 million." Present trading is slightly improved but, at this stage, it is too early to predict whether the shortfall can be recovered in the second half," said Mr McCann. Last year, Fyffes reported full-year profits of €83.8 million, but analysts were reluctant to make any adjustments to full-year forecasts until they see the extent of the half-year shortfall when the half-year results are released in June.

After the a.g.m., chief executive Mr David McCann said that Fyffes aims to float worldoffruit.com later this year. He said various fund-raising options for the Internet subsidiary are being explored, but one option would involve Fyffes floating part of the company, retaining another portion and spinning off the remaining shares directly to Fyffes shareholders. "In that situation they would have two pieces of paper, Fyffes paper and worldoffruit.com paper," finance director Mr Carl McCann added.

"It's appropriate now that Fyffes should become a separate, distinct company from worldoffruit.com," said Mr David McCann. Fyffes is funding the initial development of worldofffruit.com, but he said that the total development costs over the next two to three years will be in the order of $100 million.

Mr McCann cautioned that other companies are planning similar Internet ventures but added, with a note of confidence: "We are the only large-scale company doing this. We can put liquidity behind the product and we believe that we are the guys who will make it."

Fyffes already has 200 fresh produce traders signed up for the Internet fruit exchange. Mr McCann said worldoffruit.com does not need the participation of any other fresh produce multinationals but does require "a clatter of small traders to make it successful.".

He added that the group is willing to invest up to €100 million over the next two years in alliances and joint ventures to develop similar Internet marketplaces for other industries, using the expertise developed with worldoffruit.com.

At the meeting, chairman Neil McCann said that Fyffes intended to be at the forefront of rationalisation in the world fresh produce industry. On recent speculation linking Fyffes with a bid for the American produce group Dole, Mr McCann said: "It would be difficult to make a worthwhile comment on what is speculation . . . But I wouldn't get carried away with it," he said.

Dole said in January that it had hired Goldman Sachs to explore strategic options. The company has struggled with an oversupply of bananas in Europe and weak lettuce prices in the United States.

Mr Carl McCann said after the meeting that there was a logic in any of the industry's leading five players getting together, adding that he believed Fyffes was not likely to face any regulatory concerns.