Geest shares dive on bleak forecast
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Your support makes all the difference.SHARES in Geest, the food company responsible for 50 per cent of Britain's banana imports, tumbled 10 per cent yesterday on publication of flat half year profits.
News of the profits stagnation was accompanied by a gloomy statement about trading.
Interim pre-tax profits were marginally ahead at pounds 15.4m for the six months to 27 June, compared with pounds 15.1m.
But the shares lost 36p to close at 302p as the stock market reacted to the pessimistic assessment of trading. Worries also mounted about changes to the regulations controlling the European market for bananas.
David Sugden, chief executive, said: 'The worsening trading conditions in July and August have inevitably affected us.'
He said that consumer demand for fresh fruit and vegetables was 'sluggish' and the situation was made worse by a glut caused by a bumper fruit crop in Europe.
Volumes were down between 10 and 15 per cent in first weeks of the second half and Geest gave no indication that sales were getting any better.
In the six months to June operating profit from bananas and other fresh produce was flat at pounds 11.3m. Mr Sugden said there were 'substantially depressed prices affecting the fresh produce business in the third quarter'.
Geest has spent heavily to prepare itself for the proposed changes to EC regulations, and if the new regime gets approval Geest said its banana capacity would rise by 60 per cent.
Any benefit will not come through until 1993, however, and analysts have downgraded forecasts for the current year.
Smith New Court now predicts that Geest will make pounds 24.5m in the full year, down from its previous figure of pounds 28m and last year's actual result of pounds 26.2m.
Geest has also improved facilities to produce prepared foods such as pizzas and salads. The smaller food preparation division improved profitability in the half, making pounds 3.7m compared with pounds 3.2m.
Interim earnings per share rose from 15.1p to 15.3p and the dividend is lifted from 3.6p to 3.7p.
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