FYFFES' finance director Carl McCann made his dissatisfaction with his company's share price abundantly clear yesterday. "The results for years have justified a move ahead."
But despite a set of results that met the optimistic market forecasts, there are no indications that the Fyffes' share which has underperformed the Irish market by 15 per cent over the past 12 months - is ready to move ahead. "There are still too many imponderables about banana prices and the operation of the EU banana regime," commented one analyst.
One negative that has affected the Fyffes share has now been eliminated - ironically through Fyffes' joint venture acquisition of Geest. "The acquisition of Geest takes away an unattractive comparison we have had to live with when we have been talking to investors; that big negative is gone and will be very helpful," said the Fyffes' finance director.
But despite the elimination of this negative factor and Fyffes' discount against fresh produce groups such as Dole and Chiquita, the view in the Irish market is that Fyffes' executive will have to live with a virtually static share price. In fact, despite yesterday's results, some Irish analysts have revised down their 1996 forecasts for the group - in the light of Neil McCann's comments about flat first half profits.
Riada analyst, Mr Joe Gill has reduced his 1996 profits forecast from £45 million to £44 million and earnings from 9p to 8.5p - largely due to the uncertainty over banana prices and the operation of the EU banana regime. Last year, the EU's administration of its banana regime led to oversupply and downward pressure on banana prices.
Bloxham analyst, Mr John Conway has taken a similar view and has cut his 1996 forecast from £46.8 million profits to £45.2 million and earnings from 9.1p to 8.6p - and for the same reasons as the Riada analyst.
On these sort of earnings forecasts, Fyffes is trading on a prospective price/ earnings ratio of around 13. This may be a lot less than the multiples of Fyffes' international competitors, but a premium to food companies like Greencore whose earnings in the current year are considerably more transparent.
