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Europe’s largest distributor and importer of fruit and vegetables, Fyffes, has warned that despite better than anticipated exchange rates the high cost of oil is likely to have a negative impact on 2006 profits.

“The recent significant increase in the cost of shipping fuel has been higher than anticipated by the group and is not being recovered in current selling prices,” the company said in a statement to shareholders.

The situation, Fyffes said, is likely to persist in the medium term. It is expected that fuel and transportation expenses will cost the company EUR9m (US$11.37m) in the 2006 financial year.