West Indies storm will hit Geest profits: Banana importer's shares fall on fears that 40% of Windward Islands crop has been destroyed

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The Independent Online
SHARES in Geest, the banana importer, fell by 13 per cent yesterday when the company said profits would be hit in the wake of bad weather in the West Indies.

Geest fears that 40 per cent of the bananas it imports from the Windward Islands have been destroyed.

Plantations have been washed away by heavy rain accompanying tropical storm Debbie, which hit the region earlier this month. A tropical storm is only slightly less severe than a hurricane.

About 55 per cent of Geest's fruit comes from the Windward Islands. Brian Wallace, finance director, said he feared 20 per of Geest's overall supply might have been destroyed.

He said the company's position was made worse by the European Union tariff regime. Banana imports from the Windward Islands and other former colonial states do not incur levies until they reach 1.7 million tonnes a year.

However, imports of so-called dollar bananas - mostly grown in South America - are subject to duty, and incur further heavy tariff penalties if they exceed 2 million tonnes a year.

Geest is worried that it will have to buy dollar bananas instead of the Windward fruit. It is lobbying the Brussels trade authorities to relax the duty structure temporarily to take account of tropical storm Debbie.

No decision will be made until next Wednesday when the EU's banana management committee meets.

Mr Wallace said: 'Until the position is clarified it is not possible to give an accurate estimate of the effect on Geest's business.' The implications would be felt in the rest of this year and into 1995.

No provision for natural disasters exists in the tariff framework. Mr Wallace said he hoped the situation would prompt the authorites to set a precedent.

Geest is preparing to report interim profit figures for the six months to 30 June next Thursday.

Tim Potter, food analyst with the stockbroker Smith New Court, estimates the company will make taxable profits of pounds 6.5m, compared with pounds 3.5m last time.

The interim figures will not be affected by the storm. Mr Potter is waiting for fuller details before revising his full-year forecast, which stood at pounds 20m before yesterday's announcement. Shares fell 31p to 210p yesterday.

The storm is the latest in a stream of mishaps to hit Geest. In the past 18 months shares have halved in value.

(Photograph omitted)