It's enough to drive you bananas as a glut forces tropical fruit prices down

A BANANA glut and rising costs peeled back first-half profits at Fyffes, the tropical fruits distributor revealed yesterday.

The group said excess market supply, higher fuel costs and headwinds from a stronger dollar made for "difficult" conditions, which left pre-tax profits down 28 per cent at €13.3 million (11.1m) in the six months to June.

The banana glut was caused by the fierce winter conditions across Europe in January, when blizzards shut down the outdoor markets more common in eastern Europe but also impacted trading in western countries as customers were prevented from getting to supermarkets.

Ships unable to reach Russian ports in the extreme conditions were offloading bananas cheaply in ports such as Rotterdam, causing banana prices to plunge, a Fyffes spokesman said.

The Dublin-based group - whose Scottish operations are run out of Livingston - said trading conditions had "normalised" during the summer months while Fyffes is pushing up selling prices across all its markets.

According to the Office for National Statistics, the average retail price of a kilogram of bananas has risen from 95p in January to 109p in June.

Fyffes, whose revenues were broadly flat at €402.6m, said conditions were tough in its pineapple division for "broadly similar" reasons, with results flat year-on-year.

But a clampdown on costs drove an improved performance from its melon business, prompting Fyffes to hold its interim dividend steady as well as full-year guidance for underlying earnings of between €14m and €18m.

The firm began trading in the 1880s when the first commercial delivery of bananas from the Canary Islands arrived in London.