Fyffes says strong dollar could lift banana prices

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The Independent Online

The price of a bunch of bananas looks ready to rise this year if the current economic environment persists and the dollar remains strong against the euro. Fyffes, the Ireland-based fruit company, said yesterday that it would have "no choice but to pass on the cost to the consumer" if the US currency remained stubbornly buoyant, defying predictions by experts.

The price of a bunch of bananas looks ready to rise this year if the current economic environment persists and the dollar remains strong against the euro. Fyffes, the Ireland-based fruit company, said yesterday that it would have "no choice but to pass on the cost to the consumer" if the US currency remained stubbornly buoyant, defying predictions by experts.

The cost of a pound of bananas in the UK has already shot up by about 20 per cent in the past year, to a 49p average.

Fyffes made the comments as it reported a slump in profits for the 14 months ended 31 December and said the worldwide banana industry "experienced its toughest year in 2000". Pre-tax profits, excluding goodwill and exceptional items, fell to 31.2m euros (£19.65m) for the reporting period, from 83.1m euros in the 12 months to 31 October 1999.

Fyffes, the second-biggest importer of bananas in the European Union, said a rise in the company's dollar-based costs was the biggest cause of its underperformance. Profits were also harmed, the company said, by the glut of bananas on European markets, partly caused by a surge in illegal imports.

Carl McCann, deputy chairman of Fyffes, said currency conditions remained a concern in 2001, but he added: "We are looking forward to a brighter, happier year." A recent restructuring, including plant closures and 200 job losses, is on track to deliver annual cost savings of about £20m euros.

Mr McCann said he hoped that negotiations between the EU and the US to resolve their long-running banana trade dispute would reach a satisfactory compromise, and that there would be further consolidation in the industry. Fyffes was in a position to pursue acquisitions, he added. The group's net cash position was 90m euros at 31 December. Fyffes shares closed down 3.5p to 56p.

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