LONDON (Alliance News) - Fyffes PLC on Tuesday said it has invested USD30 million to expand capacity at its US melon business, acquired a banana farm in Costa Rica for USD15 million, and closed its Irish defined benefit pension scheme.
Fyffes said it is still "strongly" generating cash. Following the flurry of corporate activity, it expects that year-end net debt "will not exceed one times target adjusted earnings before interest, tax, depreciation and amortisation for 2015.
"Fyffes remains confident about the future prospects of its business and is well placed to compete strongly in its key markets, following these and other important strategic and operational developments in recent years," the company said.
The company said it has acquired additional melon farming assets in Central America comprising about 2,500 hectares of leased land, 100 hectares of owned land, four packaging stations and related plant and equipment for USD18.3 million, in a move to increase the group's capacity in the melon category by close to 25% for the 2015/16 US import season set to begin late November.
"This additional volume will give rise to a USD10 million to USD12 million seasonal investment in working capital before the end of 2015," the company said.
Meanwhile, the USD15 million banana farm in Costa Rica has been operated by Fyffes since early 2014 under a lease arrangement.
In addition, closing the Irish defined benefit pension scheme means that Fyffes has made one-off final payments of EUR20 million to eliminate its entire future liability under the scheme. That will increase operating profits by EUR1.0 million on a full year basis.
The pension payment was EUR10.5 million higher than the deficit provided for in the balance sheet at the end of June.
The group is due to pay EUR4.5 million over the obligations of its main UK operating company, Fyffes Group Ltd, under the Merchant Navy Ratings Pension Scheme. That money was previously provided for in the group accounts.
Shares in Fyffes were up 3.3% at 110.00 pence on Tuesday afternoon in London.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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