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 balance sheet'

"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 in pineapples.

"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.

'Performed strongly'

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".

Market reaction

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," he added.

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 June 2008.