I did not/will not buy here.FDP has told us that it was moving into processed foods, but though its SG&A costs have been contained its earnings remain disappointing. Do not cloud that fact with the "tarriff issue" - which has been factored in for about 2 years. Company now retains debt though it used to be a cash cow and has seriously reduced its dividend. Sharp management will either make or break this company and that will show up in earnings. Why would I assume their risk when I see y/y underperformance. I am starting to move off the neutral position to overvalued.
IN A trading statement issued yesterday, fruit distribution group Fyffes said profits for the first six months of the year will be about half that reported last year because of rising energy expenses and the cost of a new banana import system.
The profit is expected to come in at between 37m and 39m compared to 76m last year. Analysts had been forecasting profits of about 50m.
Despite the dramatic downgrade, the initial reaction in the market was positive, with the shares trading up 4 cents or 2.9pc to 1.4 in the wake of the statement.
The warning is the second in as many months and there was little surprise in the market, with analysts saying the profit decline had been anticipated by most investors. In May Fyffes told shareholders that its profit for the full year would be about 9m lower this year.
Fyffes said it remains "focused on enhancing shareholder value by developing its business, in particular through further strategic acquisitions and alliances."
So far this year the group has invested over 20m on a number of small scale acquisitions but Goodbody Stockbrokers, who rate the shares as a buy, said a large deal may be some way off.
A substantial deal might be still further than a year out," analyst Liam Igoe said, explaining that while forecasts anticipate a bounce in profits for some fruit firms next year, this may be unrealistic.