Total Produce reports 2.3% fall in pretax profit to €24m

FOOD GROUP Total Produce has reported a 2.3 per cent fall in pretax profits to €24.3 million for the six months ending June 30th.

The fruit, vegetable and flower distributor, which was spun out from Fyffes in 2006, has maintained its full-year adjusted earnings per share target in the range of 5.5 to 6.5 cents.

In the first half adjusted earnings per share fell 0.7 per cent to 4.06 cent, while revenues rose 1.2 per cent to €1.3 billion.

Chairman Carl McCann said the company was proposing an interim dividend of 0.54 cent.

He described the results as “in line with expectations”, and said the company had concentrated on costs to meet targets.

Operating profit fell to €22.3 million compared to €24.8 million in the first half last year. Adjusted earnings before interest, taxes, depreciation and amortisation were down 4.7 per cent at €26.3 million.

On a divisional basis, the produce unit reported a 2.8 per cent rise in revenues to €1.25 billion, despite what the company described as “challenging trading conditions”.

While overall volumes in the unit were up on the same period last year, this was due to the contribution from acquisitions secured in the second half of 2008. On a like-for-like basis volumes dipped in the first half.

The company said the strengthening of the euro by 13 per cent against sterling over the period had lowered the euro value of revenues earned in Britain. “Competitive trading conditions” in Ireland had led to a fall in revenues from the company’s consumer foods and health foods division.

During the first six months of the year, Total Produce invested €2.7 million in a bolt-on operation in Europe and a further €2.5 million in new and existing joint ventures, including a 50-50 joint venture stake in ASF Holland.

Total Produce said it had also increased its shareholding in South African fruit exporter Capespan to 15.6 per cent.

The size of the company’s pension deficit, net of deferred tax, increased by €2.3 million at the end of 2008 to €16.8 million by June 30th. Net debt at the end of the first half rose by just over €2 million to €82 million compared with June 2008.

The company said it would consider a share buyback if “appropriate opportunities arise”. Shares in the company closed 1 per cent lower at 38 cent in Dublin.

Brokers described the results as resilient in the context of difficult consumer markets, and noted the company remained strongly cash generative. Goodbody analyst Killian Murphy said the fact that the company had yet to embark on a share buyback was positive as it meant Total Produce was well-placed for acquisitions.