FYFFES Plc, the tropical fruit distributor that spun off its larger general produce unit at the end of last year, said profit declined 65% in 2006 because of a new tax on imports and increased fuel costs.
Net income fell to 29.3m, or 8.29 cents a share, from 83m, or 23.48 cents, in 2005, the Dublin-based company said last week in a statement.
The earnings included both the new general-produce company, renamed Total Produce, and the tropical-fruit unit that kept the Fyffes name.
A new European Union tariff on banana imports cost Fyffes 41m last year, and profit was also reduced by higher energy bills. Fyffes said it aims to double the size of its remaining business within the next five years.
"It's been a difficult year because of the extra costs, " chairman David McCann said in an interview. Fyffes plans to grow through a mixture of acquisitions and expanding its existing operations, McCann said, without giving details.
The importer's shares fell five cents, or 4.4%, to 1.10 in Dublin. The stock has added 6.8% this year, raising the company's market value to 386.1m. Total Produce shares closed unchanged at 88 cents.
Sales last year increased 11% to 2.42bn, comprising 555m from Fyffes and 1.86bn from Total Produce, which was spun off on 30 December.
Profit at Fyffes was less than expected, implying "a weak second half performance from the banana business in 2006, " said analyst Robert Brisbourne at Merrion Stockbrokers. Total Produce performed better than expected, he said in a note.
Pretax profit before certain items at the Fyffes business declined to 22.3m from 87.1m a year earlier, the statement shows. Profit at Total Produce increased 3.1% to 36.1m on that basis.
Average selling prices for bananas have been lower this fiscal year than in the yearearlier period, particularly in Continental Europe, Fyffes said in the statement.
"Over time, banana prices are going to have to go up, " McCann said in the interview.
Fyffes, which imports bananas, pineapples and melons, plans to pay a secondhalf dividend of 1.7 cents a share, compared with 5.20 cents in 2005 before the demerger, giving a full-year payout for 2006 of 3.39 cents.
The company also transferred real estate into Blackrock International Land Plc last year to take advantage of increased demand for property in Ireland.
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