Geest restores faith despite profit slump

Geest, long the subject of City jokes about slipping on banana skins and being blown off course by hurricanes, restored some faith among investors despite announcing a collapse in half-year profits from pounds 17.9m to pounds 4m and a maintained dividend payment of 3.7p.

The shares, down to a 10-year low of 154p in June, rose 5p to 191p as several analysts maintained that the company would beat last year's profit of pounds 12.3m, before exceptional items, with a result of around pounds 15m.

Exceptional items and a slump in banana prices wreaked most damage on the figures for the six months to 1 July. The result was struck after an exceptional pounds 5m loss on the disposal of the wholesale markets business, and in the comparable period there was a credit of pounds 2.8m.

The recovery of Geest's banana operations from the devastation of Hurricane Debbie two years ago suffered a setback, caused by a 6 per cent fall in prices in the UK and a steeper 11 per cent drop in north continental Europe.

However, David Sugden, chief executive, told analysts yesterday that "there are now sure signs that banana prices are firming". Production on the company's farms in Costa Rica had "improved markedly".

Contrary to some press reports earlier this week, Mr Sugden reiterated Geest's com- mitment to the banana business and, in particular, its relations with the Windward Islands. "We continue to ship 100 per cent of Windward Island fruit," he added.

Analysts believe the powerhouse of profits growth will come from chilled foods, a business Geest moved into only a few years ago. This operation is expected to yield pounds 10m of operating profits this year.

Geest, one of the few companies that has been able to display its brand name on Marks & Spencer's shelves, is a prime supplier of prepared meals, salads and dips to the leading supermarket chains.

And despite more recent hurricanes and tropical storms, Mr Sugden said he expected the banana operations to meet expectations for the year.