Total Produce Buys into California Avocado Deal
September 2, 2014
Source: Fresh Fruit Portal
Irish multinational Total Produce (T70.IR) has acquired a 45% interest in Californian avocado company Eco Farms, with options to buy further shares in the future to gain a majority holding.
The company took the opportunity to make the announcement in its interim results for the first half of 2014, although the acquisition took place after that period.
The move builds on the company’s North American operations where it holds a stake in Vancouver-based Oppenheimer Group, and more recently on a 50% purchase of Dutch soft fruit company All Seasons Fruit (ASF).
Chairman Carl McCann highlighted a “robust” performance for the half with adjusted EBITDA only 2.7% lower year-on-year at €38.1 million (US$50 million), which is notable given the previous period’s results included almost four months of sales before Total Produce divested its stake in the Capespan Group.
On a like-for-like basis, revenue was down 1.7% at €1.59 billion (US$2.09 billion).
The bulk of the company’s decline in profitability can be explained by a 14.4% drop in adjusted EBITA in the Eurozone, due mainly to a warmer spring which drove up domestic produce volumes and pushed down average prices.
Profit was up slightly for Total Produce’s Northern European and International (North America, India) businesses, and rose significantly at a rate of 30.6% in the U.K.
“The results were assisted by the 4.4% strengthening of Sterling in the period which lead to higher translated Euro amounts and the positive impact of acquisitions completed in December 2013,” McCann said.
“On a like-for-like basis excluding currency translation and acquisitions, revenue was back c.3% with decreases in average prices offset by some volume increases.”
The executive added the group continued to monitor developments relating to Russia’s ban on produce from the European Union, but expectations were that the sanctions would not materially impact the company.
“During August, in an unexpected development, Russia introduced sanctions banning the import of certain origins of fruits and vegetables, including the EU for a period of 12 months,” McCann said.
“Total Produce does not have any operations in Russia and whilst the Group’s sales to Russia are modest at less than 2% of total revenue, there may be an impact on prices due to excess supply in Europe.”