Geest stuck on its banana boat

Banana skin jokes are wearing a little thin with investors in Geest, which with the Irish group Fyffes dominates the import of bananas into the UK.

The shares have plunged from a high of 479p two years ago to a new low of 159p, perilously near their 1986 flotation price of 125p.

The reasons are not hard to find. Having seen its plantations ravaged by the dread black sigatoka disease and weighed down by a glut of bananas, Geest had a tough 1993. But last year its sufferings were of positively Biblical proportions, as its Windward Islands producers coped with drought, followed in quick succession by the depradations of storm Debbie.

In the circumstances, yesterday's pre-tax profits of £12.8m for the year to December were not a bad result, coming after the hefty exceptional charges and loss of £5.4m in 1993.

The results were a touch ahead of the company's profit warning in January, when Geest braced the market for last year's loss of Windward volumes. In the event, they cost the best part of £7m, although fresh produce - essentially bananas - saw profits more than double to £13m.

But the pain is continuing into the new year. The chief executive, David Sugden, warned yesterday that the after-effects of Debbie would cut first- half earnings to below last year's record level, when pre-tax profits hit £17.9m.

Beyond that, he admitted that the growth prospects for the business are limited.

It is hardly surprising that Geest is emphasising the attractiveness of its prepared foods business. Sales grew 32 per cent to £141m, a couple of points ahead of the market, last year, while profits leapt 44 per cent to £7.5m. Geest is pumping £18.7m into the division this year, up from £8.8m last time, and expects profits to hit £10m.

But while he sees chilled prepared foods as "the main engine" of the group's future growth, Mr Sugden has set his face against any demerger of the banana business.

That strategy looks fundamentally flawed while bananas clearly remain the core of the business and with Fyffes offering better returns.

Profits this year of somewhere over £15m would put the shares on a forward multiple of around 11. That would still be less than half the profits level achieved in 1993/4 by Fyffes, which has accelerated away from Geest in the last two years.

With the shares on the floor, the only thing standing between the company and a hostile bidder appears to be the distractions and financial difficulties of big US rivals like Dole and Chiquita. While a takeover remains a possibility, however, and supported by a maintained dividend of 8.1p, the shares are worth holding onto.

Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
Arts and Entertainment
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
Life and Style
Dale Bolinger arranged to meet the girl via a fetish website
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
Life and Style
ebookA unique anthology of reporting and analysis of a crucial period of history
The Commonwealth flag flies outside Westminster Abbey in central London
Arts and Entertainment
Struggling actors who scrape a living working in repertory theatres should get paid a 'living wage', Sir Ian McKellen has claimed
Skye McCole Bartusiak's mother said she didn't use drink or drugs
peopleActress was known for role in Mel Gibson film The Patriot
Arts and Entertainment
tvWebsite will allow you to watch all 522 shows on-demand
Arts and Entertainment
filmThe Rock to play DC character in superhero film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Training Programme Manager (Learning and Development)-London

£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

Training/Learning and Development Coordinator -London

£28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Project Manager - ETRM/CTRM

£70000 - £90000 per annum + Job Satisfaction: Harrington Starr: Project Manage...

Day In a Page

Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

Meet the people who play with Lego for a living

They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

20 best days out for the summer holidays

From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
Open-air theatres: If all the world is a stage, then everyone gets in on the act

All the wood’s a stage

Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Rand Paul is a Republican with an eye on the world

Rupert Cornwell: A Republican with an eye on the world

Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
Self-preservation society: Pickles are moving from the side of your plate to become the star dish

Self-preservation society

Pickles are moving from the side of your plate to become the star dish
Generation gap opens a career sinkhole

Britons live ever longer, but still society persists in glorifying youth

We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor