Geest warns of loss for 1993: Shares hit as disease strikes bananas

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The Independent Online
ALMOST a quarter was wiped off the market value of Geest, the fruit company, yesterday after it warned that a glut of bananas in Europe and an outbreak of disease in some of its plantations meant it would make a loss for 1993.

The shares plunged from 363p to 276p, their lowest for more than a year. It was the second profits warning by the group in nine months - it warned last May that it would be hit by European reforms.

The main reason for the shortfall is an pounds 8.9m provision for dealing with an outbreak of fungus at its Costa Rican plantations, which has cost about a third of production. Affected stems have to be cut down and it takes nine months for their replacement to bear fruit.

The group has also been hit by oversupply of bananas in Europe following the introduction of reforms to the import regime last July. Delays in issuing quota licences meant that producers flooded the market, pushing wholesale prices below 25p a pound.

David Sugden, chief executive, said the quota for 1994 meant the market 'will get a lot better'. But a last-minute addition to the Gatt agreement, offering Latin American producers an extra 200,000 tonnes of imports by 1995, could put further pressure on prices.

'This offer was made on purely political grounds and the proposed increase in quota has no market rationale,' he declared.

Geest said it would maintain its final dividend at 4.7p despite the loss. Analysts have downgraded their forecasts from pounds 10m profit to pounds 5m loss for 1993 and from about pounds 26m to pounds 20m in the current year.

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