LONDON (Alliance News) - Irish fruit and fresh produce company Fyffes PLC reported Wednesday higher revenue but a drop in pretax profit for the first quarter of its new financial year, having booked EUR6.2 million in costs associated with its proposed merger with Chiquita Brands International Inc to create the biggest banana company in the world.
For the three months ended March 31, Fyffes reported a pretax profit of EUR9.5 million, down from EUR12.8 million the prior year, having already booked around EUR6.2 million in professional and advisors' fees and related costs related to the proposed merger with Chiquita.
Excluding these costs, its pretax profit increased to EUR15.8 million, up 18% from the EUR13.4 million reported a year earlier, which the group said was driven by its US melon business, which saw further like-for-like volume growth.
Total revenues for the period rose 3.4% to EUR306.5 million, including its share from joint ventures, compared EUR296.5 million a year earlier. Group revenue, excluding joint ventures, was up 5.4% at EUR256.7 million.
"The key drivers of the group's short-term performance in its tropical produce operations, and its banana category in particular, are average selling prices, exchange rates and the costs of fruit, shipping and fuel, all of which can result in volatility in year on year profitability," the company said in a statement.
Fyffes said that sales in the first quarter were higher in each of the its product categories, driven mainly by organic growth and partly offset by lower average prices in the banana and pineapple categories, particularly in Continental Europe.
Fyffes and US-based banana distributor Chiquita Brands International Inc announced in March that they have agreed a merger which would create the world's biggest banana company, in a USD1.07 billion all-share deal.
The all-stock deal would result in Chiquita shareholders owning 50.7% and Fyffes holders owning 49.3% of ChiquitaFyffes, a New York-listed company with annual revenues of about USD4.6 billion.
The deal comes as banana producers continue to struggle, with prices continuing to fall while production costs rise. However the deal has drawn scrutiny of antitrust regulators.
"A registration statement on Form S-4 has been submitted to the (Securities and Exchange Commission) in the US and will be circulated to shareholders once it has been declared effective by them. The review of the proposed merger by anti-trust authorities in various jurisdictions is ongoing," Fyffes said in a statement Wednesday.
Fyffes shares were trading 1.8% higher in early trading Wednesday, at 94.66 pence.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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