Fyffes has raised its forecast for full-year profits for a second time, crediting rises in banana prices prompted by a squeeze in supplies.

Fyffes, the world's oldest fruit brand, raised to E18m-22m its forecast for underlying operating profits for 2009, up E2m on both ends of the range.

The increase reflected a determination to "pursue further necessary increases in selling prices [of bananas] in all markets" after rises in the first six months helped group report a 16.8% rise to E18.1m in underlying operating profits.

Results are often weighted towards the first half of the year.

Profits from bananas rose E2.9m, as a shortfall of bananas in Europe allowed it to more than make up for higher costs of buying the fruit from producers.

"Market conditions, particularly in Continental Europe, were generally favourable, especially during the second quarter," the Irish-based group said

'Probably upside to our forecast'

The data initially sent Fyffes shares soaring 8% in Dublin before a 2.2% retreat to E0.45 in afternoon trade.

John O'Reilly, analyst at stockbroker Davy, upgraded his forecast for Fyffes' full year adjusted operating profits to E19m, and hinted that a further upgrade may be in the offing.

"It will be obvious that we are assuming little more than break-even for the second half," he wrote.

"Even allowing that the full-year result is heavily first-half-weighted and in the context of a persisting advance in green banana prices and a robust UK retail pricing environment, this is probably niggardly.

"Thus, it is not gratuitous to suggest that there is probably upside to our forecast."