20 Oct 2015 16:03
Stock Exchange Announcement
Fyffes invests US$30m in significant expansion of capacity in US melon business
Fyffes acquires banana farm in Costa Rica for US$15m
Fyffes closes Irish Defined Benefit Pension Scheme
Fyffes is pleased to report a significant further expansion of capacity in its US melon import business. In a number of separate transactions, the Group has acquired additional melon farming assets in Central America comprising c.2,500 hectares of leased land, 100 hectares of owned land, 4 packing stations and related plant and equipment for a total consideration of US$18.3m. These transactions will increase the Group's capacity in the melon category by close to 25% for the 2015/16 US import season which commences late next month. This additional volume will give rise to a US$10m-US$12m seasonal investment in working capital before the end of 2015.
Fyffes is also pleased to report that it has completed the purchase of a banana farm in Costa Rica for US$15m. Fyffes has been successfully operating this farm since early 2014 under a lease arrangement, demonstrating the Group's capabilities in farming on a large scale in all three of its product categories.
Fyffes has closed its Irish defined benefit pension scheme to both future accrual and future liability. Fyffes has made once-off final payments of €20m to eliminate its entire future liability under this scheme, which will increase operating profits by c.€1m on a full year basis. This payment was €10.5m higher than the deficit provided for in the balance sheet at 30 June 2015, which was measured on a continuing basis in accordance with the relevant accounting standard, and reflects the impact of the discontinuance of the scheme. The Group is also due to pay €4.5m in respect of the obligations of its main UK operating company (Fyffes Group Ltd) under the Merchant Navy Ratings Pension Scheme. This amount was previously provided for in the Group accounts.
Fyffes continues to be strongly cash generative and, following this series of earnings enhancing developments, it anticipates that year end net debt will not exceed one times target Adjusted EBITDA for the year. 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.
Fyffes plc
20 October 2015
For further information, please contact:
Sheila Gahan, Wilson Hartnell PR - Tel: +353 1 669 0030 / 087 234 2409
Ivan Murphy, Davy Corporate Finance - Tel: +353 1 679 6363