In an announcement that followed news that Fyffes’ year-on-year profit fell in the first quarter, the Irish fruit distributor has said that it plans to separate its general and tropical produce businesses with the aim of maximising shareholder value.
The company posted a pre-tax profit of EUR39.6m (US$50.8m) for the first half of the year, down from EUR76.1m for the same period of 2005. Although profits were dramatically down, the result beat the company’s forecast of EUR37-39m.
Revenues for the period remained flat at EUR1.17bn, but EPS dropped to7.96 cents from 15.10 cents a year ago.
Delivering the results, Fyffes said that the full year forecast remained the same. In May the fruit distributor had warned that profits for the year would be hit by high oil prices.
The company said that it intends to demerge its general produce and distribution business into a new separately quoted company to be owned entirely by Fyffes shareholders.
“Following the successful completion earlier in the year of the demerger of the group’s property business to Blackrock International Land, Fyffes has undertaken a further strategic review of its operations and has concluded that significant incremental shareholder value can be created by the proposed demerger of the group’s General Produce and Distribution business,” the company said.
Fyffes shares jumped on the announcement, increasing by 3.77% to EUR1.65 at time of press.