Fyffes is to pay a €20m special dividend to reflect what it has called an “exceptional performance in 2005”.
In a pre-close statement released to the Stock Exchange today, the Irish food group said: “Market conditions, particularly for Fyffes’ Tropical Produce operations in Continental Europe, have remained strong during the second half of the year. This has helped offset the significant cost inflation being experienced in the sector and, consequently, the group is on course to report another record performance this year. Fyffes is now targeting a percentage increase in adjusted earnings per share for the full year 2005 in the low to mid-20s, ahead of the group’s previous expectations.”
As a result of the company’s progress, Fyffes said it plans to pay a special second interim dividend for the year of €20m (equivalent to €0.0572 per share) on 3 March 2006 to shareholders on the register on 10 February 2006. The board currently anticipates that the final dividend for 2005, which will be proposed for approval at the AGM in May 2006, will remain unchanged from 2004 at €0.052 per share.
However, in the statement, Fyffes added that it was facing higher costs in 2006.
“Looking ahead to next year, the industry is facing a number of significant challenges. As already signalled, the EU’s intention to replace its current banana import regulations with a tariff-only regime will increase Fyffes’ duty costs by €40m in 2006. In addition, the continuing effect of higher shipping and fuel costs is expected to add a further €15m to the Group’s costs next year, at current exchange rates. These higher costs will need to be recovered from customers and suppliers. It will also take some time to assess the impact on the market of the elimination of quotas on banana volumes imported from Latin American sources.”
The company added that it continued to actively pursue opportunities to apply its “substantial resources to develop the Group’s business through further attractive acquisitions and alliances.”