Bananas
Currency rate changes pushed up cost of fruit but improved group’s sales revenue, while input costs also fell
Irish tropical fresh produce company Fyffes has reported strong trading figures for the first half of the financial year, including an operating profit of €31.2m.
The result was 38.2% higher than during the same time last year, mainly due to the fact that fines owed to the European Commission by Fyffes’ German import joint venture Inter Weichert – for breaching competition rules governing the supply of bananas in the EU during the period 2000-2002 – were less than in the year-earlier period.
In addition, Fyffes managed to bring its savings back into the black, turning an €11.7m debt at the start of the year into a net cash reserve of €18.6m as of 30 June 2015.
“Fyffes is pleased to report a continuation of the strong growth in earnings achieved in recent years, with a 12.2% increase in adjusted [earnings per share] in the first half of the year,” commented group chairman David McCann.
The group also reconfirmed that it was targeting increased earnings (before interest and tax) for the year of between €44m and €50m. “This demonstrates the group’s ability to quickly adapt to prevailing market conditions given the significant adverse movement in exchange rates earlier in the year,” McCann added. “Fyffes continues to pursue increases in selling prices in all markets in this regard.”
Total revenue including joint ventures increased by 8.7 per cent in in the first half to €644.3m. Group revenue, meanwhile, which excludes Fyffes’ share of its joint ventures, amounted to €540.6m for the same period, up 10.3%.
Those increases were in part due to favourable changes in the value of the euro against both sterling and the US dollar when converting sales made in those currencies.
In addition, Fyffes delivered modest organic volume growth in the banana category, combined with some price increases in each product category. “Fyffes delivered a very satisfactory result in the banana category in the first half with operating profits €2m higher year on year,” the group said in its half-year report. “This was achieved notwithstanding the significant adverse change in exchange rates due to the strengthening late last year and early this year of the US dollar against sterling and particularly the euro.”
The fact that key the cost of running its banana business – including logistics, fuel and other import and operating costs in the UK – was cheaper in the first half of 2015 helped Fyffes significantly. Banana volumes, meanwhile, saw a modest increase in the period mainly thanks to rising demand from existing customers and price increases, it said.
Fyffes’ pineapple operations reportedly achieved a strong result in the first six months of the year with a €0.9m increase in profits, aided again by lower input costs and despite exchange rates exerting similar pressure. The group said its average selling prices were higher than in the first six months of 2014, in part due to a downturn in available volumes in the market.
Finally, its US melon business delivered a “satisfactory” result, with profits similar to what was described as a “very strong” result in the same period of 2014, “particularly given the prolonged period of poor winter weather experienced in the US earlier this year”. Weather issues in production regions apparently resulted in a slight fall in total volumes, contributing to an increase in production costs. “The group secured a modest level of price increases in response,” it stated.
The Birmingham-based banana supplier has agree to supply containers to key Russian fruit exporter, Fruit Brothers
BanaBay has taken a leap forward with banana sales in Russia by securing a significant new customer following a successful product trial.
Having experienced BanaBay produce via the European spot market, Fruit Brothers, one of the leading fruit and vegetable exporters in Russia, approached BanaBay directly and will now be supplied with 12 to 15 containers of bananas per week to distribute to supermarkets in the largest Russian cities and other regions.
Vitali Donskoi, BanaBay’s business development manager responsible for Russia, said: “The Russian market is really huge and growing fast, so we will always be interested in any opportunities and challenges arising there.
“Now that we have had our first success, we are currently exploring how to start working directly with retailers as this is another fantastic potential customer base for us.”
SCS Global Services completes third-party audit of Fresh Del Monte’s plantations in Costa Rica and Guatemala
Worldwide certification body SCS Global Services (SCS) has announced that Del Monte Fresh Produce has received Sustainably Grown certification for all of its banana plantations in Costa Rica and Guatemala, as well as its pineapple farms in Costa Rica.
Receiving Sustainably Grown certification for these operations marks the culmination of a multi-year effort by Del Monte to improve and verify its sustainable farming practices in Central America through third-party assessment.
As a result, certified Del Monte pineapples and bananas will now feature the SCS Kingfisher Sustainably Grown certification mark in stores.
First introduced in 2003, the SCS Sustainably Grown certification programme is one of the world’s most strict standards for sustainable agriculture. The standard includes yearly auditing for compliance and emphasises continuous improvement, requiring certified farms to build on their sustainable practices over time.
“Sustainably Grown recognises agricultural operations that are on the cutting edge of sustainable farming,” said Dr Stanley Rhodes, founder and CEO of SCS Global Services. “Del Monte has proven that they are serious about growing bananas and pineapples in ways that minimise environmental impact while ensuring the health and safety of its workers and their communities.”
Del Monte farms receiving Sustainably Grown certification are audited to a rigorous set of environmental, social and quality criteria including, sustainable crop production, ecosystem management and protection, resource conservation and energy efficiency and integrated waste management.
Other factors taken into account include fair labour practices, community benefits, product quality, and product safety and purity.
“Del Monte Fresh is committed to embracing sustainable agriculture and making environmental conservation and fair labor practices a major part of our banana and pineapple supply chain,” said Hans Sauter, vice-president corporate research & development and agricultural services for Del Monte. “Achieving Sustainably Grown certification assures our customers that they are receiving produce that is grown in a responsible way.”
Certified Del Monte bananas and pineapples featuring the Sustainably Grown Kingfisher certification mark will begin appearing on store shelves in Europe and the United States in 2015.
Fairtrade Foundation says 100,000 emails have been sent to supermarkets asking them to stock Fairtrade bananas
Shoppers have sent more than 100,000 emails to Asda and Tesco stores asking them to switch their banana offering to Fairtrade, the Fairtrade Foundation has said.
And Fairtrade supporters dressed as bananas, and holding a five-meter inflatable banana decorated with the message ‘Go Fairtrade’, have campaigned outside stores in cities across the UK, and outside Asda’s Leeds HQ.
The organisation launched a new campaign last month to persuade the two top four retailers to choose certified banana lines. It claims that less than 10%% of the bananas sold by Asda and Tesco are currently Fairtrade certified.
It said that more than eight in ten Asda and Tesco shoppers would pay more for their bananas if the workers who produced them would benefit.
But both supermarkets have claimed that their banana procurement and supply chains have higher or equivalent standards than the Fairtrade certification. Asda said that its banana lines are fairly traded, while Tesco said it pays its banana workers on average 6% more than the Fairtrade minimum price.
Head of campaigns at the Fairtrade Foundation, Jonathan Smith, said that since the start of the campaign Tesco has made some new public commitments about its banana sourcing, including a pledge to pay living wages to workers on banana plantations by 2017.
“However, we are still waiting for commitment to independent verification. This is what the UK public are calling for, and what we believe is vital in order to protect the interests of both farmers and workers in the developing world, and shoppers here in the UK,” he said.
“Shoppers across the UK are sending a clear message to Asda and Tesco – they want an independent assurance that banana farmers and workers are not paying the price for their cheap fruit,” said Smith.
Smith added that the campaign has heard “nothing of substance” from Asda.
The Fairtrade Foundation said the typical retail price for bananas is 68p per kilo, compared with £1.08 in 2002, which adjusted for inflation is equivalent to £1.40 today.
Contract signed with a UK entity for the supply of one container of bananas per week, which is expected to rise over time
Jamaica is set to supply more bananas to the UK.
The Caribbean nation’s agriculture minister Derrick Kellier told the Jamaica Gleaner that a contract has been signed with a UK entity for the supply of one container of bananas per week, which is expected to increase to 10 containers over time.
In June, Jamaica resumed banana shipments to the UK after a six-year absence from that market because of the devastating effects of several hurricanes on the sector and changes in the preferential agreement with the UK.
The weekly shipments of the fruit, weighing just over 2,000 pounds, continued up to the end of August, and the ministry had said then that a UK buyer would arrive in Jamaica to negotiate long-term contracts for importing Jamaican bananas into Britain.
“As we increase opportunities through the export platform, we continue to develop marketing arrangements with our partners in the United States and those in the UK,” Kellier said.
Multinational fresh produce company reveals offer for up to US$175m in value of Its outstanding ordinary shares
Fresh Del Monte Produce has announced that it is commencing a modified “Dutch auction” tender offer to purchase its outstanding ordinary shares, subject to the terms and conditions of the tender offer.
The tender offer will expire at 11:59 pm, New York City time, on 2 December 2014, unless extended or terminated by the Company.
Fresh Del Monte is offering to purchase shares having an aggregate purchase price not exceeding US$175m.
“Pursuant to the tender offer, the Company’s shareholders may tender all or a portion of their shares (1) at a price specified by the tendering shareholder of not less than US$30.50 nor greater than US$34.50 per share, or (2) without specifying a purchase price, in which case their shares will be purchased at the purchase price determined in accordance with the tender offer,” the group noted. “When the tender offer expires, the Company will determine the lowest price within the range of prices specified above (the “purchase price”) enabling the Company to purchase the number of shares of its outstanding ordinary shares having an aggregate purchase price not exceeding US$175m.”
The group noted that shareholders would receive the purchase price in cash, subject to applicable withholding and without interest, for shares tendered at prices equal to or less than the purchase price, subject to the conditions of the tender offer, including the provisions relating to proration, “odd lot” priority and conditional tenders.
All shares purchased by the Company will be purchased at the same price, and all shares tendered at prices higher than the purchase price will be promptly returned to shareholders after the expiration of the offer and determination of the purchase price.
“The Company’s board of directors has authorised the tender offer,” the group confirmed. “However, none of the Company, the Company’s board of directors, the dealer manager, the information agent or the depository makes any recommendation to shareholders as to whether to tender or refrain from tendering their shares or as to the price or prices at which shareholders may choose to tender their shares. No person is authorised to make any such recommendation. Shareholders must make their own decision as to whether to tender their shares and, if so, how many shares to tender and the price or prices at which their shares should be tendered.”
The Banana Growers Council is expecting Australian banana production to reach a record high over the past financial year
The Banana Growers Council has predicted a record year for Australian bananas, with total production set to surpass 29m cartons by the end of this financial year, according to ABC Rural.
“These sort of numbers, even a couple of years ago, would have completely destroyed the market,” the council’s Doug Phillips told the ABC, adding that this year market demand has matched supply.
“What we’ve seen this year is relatively reasonable return…the fruit has really flowed through the market quite well. We haven’t seen chronic over-supply.
“The fact we have seen this quantity of fruit flow through the market is testimony to the fact we are getting results through marketing, but it has been backed up with some good-quality fruit as well,” said Phillips.
According to the ABC, this record year of production puts Australia’s banana industry as the leading horticultural industry in the country, an expansion that Phillips said is a challenging but positive one.