Fyffes raised the prospect of a return to acquisitions this
year as it unveiled a doubling in earnings, boosted by bumper melon volumes and
success in lifting banana prices.
Shares in the Irish-based group soared to their best finish in nearly five years.
Fyffes, restating a forecast of earnings
before interest, tax and amortisation (ebita) of E27m-33m this year, said it
was "focused on achieving further growth", including through "strategic acquisitions".
The group has made sporadic acquisitions, including in 2011
Germany's Fruchtimport van Wylick, and in 2008 60% of Florida-based melon
importer Sol Group Marketing.
However, the chance of further deals was seen as high by stockbroker
Davy, which highlighted that Fyffes ended 2012 with net cash of E8.6m, compared
with debt of E1.6m a year before.
'Fyffes has the
"This further enhances an already robust balance sheet,
which is underpinned to a large extent by tangible assets – namely its farmland
assets in the pineapple and melon category," Dublin-based Davy said.
Fyffes has raised its land portfolio, include leased farms, to
8,900 hectares from 1,800 hectares in 2006, as it has pursued a strategy of
growing more of its own fruit.
The Irish-based group, the oldest fruit brand, now grows all
the melons it sells, plus 5-10% of its banana sales volumes and roughly one-half
"We believe that the company will look for strategic
acquisitions in 2013 to augment non-organic growth rates - it has the balance
sheet to pursue this strategy," Davy analyst John O'Reilly said.
The comments followed Fyffes release of results which showed
that its earnings soared to E24.7m from E11.2m the year before, on revenues up
19.7% at E1.02bn.
Ebita increased 36% to E31.6m.
The result was lifted by factors including higher melon
volumes, and prices, and success, boosted by "supply constraints", in pushing
through to retailers higher banana costs – at a time when Fyffes is lowering
its logistics bills.
Fyffes said it "performed strongly in the banana category in
2012… achieving further organic growth, with new and existing customers".
Davy's John O'Reilly, maintaining an "outperform" rating on
Fyffes shares, termed the results "strong", and ahead of his forecasts.
"The key to the future success of the business lies in
management's ability to allocate capital in a fashion that will not dilute
current returns on invested capital, while targeting higher non-organic growth,"
At rival broker NCB, Darren Grenfield said that Fyffes' "performance
in 2012 given cost and foreign exchange pressures is very impressive, even
given the support provided by restricted industry banana volumes in Europe".
Fyffes shares closed up 5.8% at E0.635 in Dublin, the stock's highest finish since