Fruit firm Fyffes has written off €15.6 million (£12.3 million) following the failure of its worldoffruit.com Internet venture. The loss contributed to a 91 per cent fall in pre-tax profits last year, which fell to €7.5 million from €83.9 million in 1999, when added to other exceptional expenses, goodwill and a slump in operating profits.
While the fall in pre-tax profits was Fyffes' first in 41 years, such figures are not strictly comparable because the results reflect trading throughout 2000 and the final two months of 1999. Figures for 1999 reflect business in the 12 months to October 31st.
Fyffes spent the equivalent of 56.1 per cent of its €27.8 million operating profits on the Internet project. Its deputy chairman, Mr Carl McCann, said the 65 per cent fall in operating profits from €80.2 million a year earlier reflected "extremely difficult" trading conditions. Factors affecting Fyffes' performance included the dollar's strength against the euro and sterling, banana smuggling in southern Italy, world oversupply and rising fuel and packaging costs.
Mr McCann said the firm expected a "better outcome" in 2000 but said exchange rates were still below those of a year earlier.
Fyffes said a cost-saving programme introduced last June would save €20 million this year. It anticipated a better performance from Capespan Europe, of which it owns 50 per cent, following a poor result last year due to poor weather in South Africa.
The company said the regulatory environment in the banana industry remained uncertain. New import regulations proposed by EU member-states were opposed by most in the trade, it said.
Mr McCann denied a suggestion that its expenditure on worldoffruit.com was exor bitant. Worldoffruit.com was planned as a portal for the fresh produce industry. A year ago the company said it would float that business, probably on New York's Nasdaq exchange.
Mr McCann described the project as ambitious and technically complex. Initial targets were met, but the company failed to secure investment after tech stocks slumped last spring.
The firm was concentrating now on a separate Internet project in a joint venture with Glanbia, known as Ingredients Net.com. Fyffes spent €1.3 million last year on that initiative and would ultimately spend €2.5 million. Its secretary, Mr Philip Halpin, said the product aimed to facilitate a smaller number of transactions than worldoffruit.com, but with larger volumes. Fyffes' total revenues rose to €2.23 billion in the 14-month period from €1.89 billion in the previous 12 months. The firm said revenues in November and December in 1999 were €279.3 million.
Excluding goodwill, Internet projects and other exceptional items, pre-tax profits fell to €31.2 million in the 14-month period from €83.1 million in the previous year. In November and December in 1999, the equivalent figure was a loss of €5.2 million.
Fyffes adjusted earnings per share was 5.36 cents in the 14 months when goodwill, e-commerce and exceptionals were excluded. Such earnings fell from 17.05 cents in the previous 12-month period.
The stock closed four cents weaker yesterday at 90 cents. About 13 months ago, Fyffes shares reached a peak of €3.98 on the back of the world offruit.com intiative. Its final dividend of 3.2549 cents per ordinary share, to be paid on June 22nd, was the same as last year.
