Fyffes put European consumers on alert for higher banana prices as it unveiled well-received first-half results and raised its forecast for full year profits, sending its shares to a four-year high.
The Irish-based group, the world's fourth-ranked banana shipper but the top supplier to Europe, said it was "continuing to pursue necessary increases in selling prices in its key markets" to offset higher costs.
The caution adds to the foods from grains to peaches in which European buyers face upward price pressure.
Besides increased costs of the fruit itself - which plantations group Sipef noted last month were being supported by "generally unfavourable weather conditions in the largest producing countries of Central America" - Fyffes said that a 20% increase in bunker fuel prices, and the strength of the dollar, had also lifted its bills.
"The industry experienced a number of headwinds during the first half of the year," the company said.
However, it offset the rising costs in part through logistical efficiencies, switching from a strategy of transporting bananas in refrigerated holds of ships to moving them in chilled containers instead.
This "ensures freshness of produce and delays the banana-ripening process", so limiting waste and allowing greater flexibility in getting produce to retailers.
"Shipping efficiencies are critical to cost structures," Fyffes added.
The move helped the group lift underlying earnings before interest, tax, depreciation and amortisation (ebitda) for the first six months of the year by 36% to E28.1m.
And, saying trading conditions in Continental Europe had been "broadly satisfactory" over the summer, the group lifted to E28m-33m, from E25m-30m, its forecast for full-year earnings.
'Below fair value'
The data were well-received by analysts, with NCB's Darren Greenfield terming the results "strong" and restating an "accumulate" recommendation on Fyffes shares.
"While Fyffes profits can be volatile, we believe the stock is trading below fair value," he said.
Goodbody's Liam Igoe, who had a "reduce" rating, said was likely to increase his forecast for Fyffes' full year earnings, while Davy's Aiden O'Donnell termed the results "very strong".
"The stock trades on a low valuation on any metric one cares to choose and these results, and those over the past three years, deserve a higher rating," Mr O'Donnell said, restating an outperform rating.
Fyffes shares soared to E0.51 in Dublin, their highest since August 2008, before easing to close at E0.50, a gain of 6.4% on the day.