September 2011: David McCann, chairman, Fyffes plc

Master of the fruit world, David McCann, chairman of Fyffes plc is this month’s Business Person of the Month.

Because

Fyffes posted a pre-tax profit of €17.3mn for the first six months of 2011, up 30.4% on the same period last year. Total revenue for the fruit importer, was up 13.9% year-on-year in the first half, amounting to €459mn. David McCann joined Fyffes plc in 1986 having previously been a partner in a Dublin law firm. He became managing director in 1989 and served as CEO between 1995 and 2006 before becoming executive chairman. He is the great-grandson of one of the founders of the company.

History and branding

Fyffes plc was incorporated in 1888 and now operates in approximately 70 locations across Europe, the US and Central and South America. They employ more than 5,000 people worldwide and are headquartered in Dublin. Traditional sources in the Caribbean have been joined by countries in Central America. Today, Fyffes works with growers in a number of countries including the Windward Islands, Belize, Costa Rica, Colombia, Dominican Republic, Ecuador, Ivory Coast, Honduras, Cameroon, Brazil and Peru. Fyffes owns or leases 6,000 hectares of land in Central and South America, but the majority of their fruit is sourced under long-term supply contracts, with purchase prices and charter rates agreed annually. In addition to growing and shipping facilities in the Americas, Fyffes have offices and ripening facilities across Europe, operating premises in the UK, The Netherlands and Germany.

Its primary activities are the production, procurement, shipping, ripening, distribution and marketing of bananas, pineapples and melons. It is the largest fruit importer in Europe and is estimated to have two-thirds of the UK banana market. The Fyffes banana brand is the oldest branded fruit worldwide, founded back in 1929. Fyffes currently markets fruit in Europe and the United States under the Fyffes brand as well as Turbana and Coplaca. In other fruits they operate under brands such as Enza, Jaffa, Carmel, Outspan and Zespri.

Investment and diversification

Fyffes are primarily involved in the importation and marketing of fruit, but under McCann’s stewardship have diversified to reduce their reliance on bananas.

Fyffes’ activities also include property within its associated company Balmoral International Land plc. Balmoral began operations on May 11 2006, as Blackrock International Land plc, by acquiring the property undertaking of Fyffes plc, together with related debt due to Fyffes and ancillary net liabilities. Consideration for the transaction was settled by a one-for-one issue of Blackrock shares to Fyffes’ shareholders. On May 12 2006, Fyffes subscribed €83mn cash for a 40% shareholding in Blackrock.

In accordance with International Financial Reporting Standards, Fyffes’ 40% stake in Balmoral is treated as an investment in an associated company and accounted for under equity accounting rules.

Under these rules, Fyffes’ carries this investment at €10.6mn, representing its share of Balmoral’s reported net assets at June 30 2011. The market value of this investment at that date was €3.7mn based on Balmoral’s then share price of €0.016.

Acquisitions and subsidiaries

In January of this year, Fyffes purchased a 33.3% stake in German fruit distributor Van Wylick. Fyffe’s half-yearly profits included a €29mn first-time contribution from Van Wylick. The performance of Van Wylick is a clear example of the strategy of McCann to acquire strong performing businesses in the sector. Other global subsidiaries of Fyffes include Banana Importers of Ireland Limited,  Fyffes Bananas North America Limited (US)  and Anaco International BV (The Netherlands).

 C.V. highlights

• McCann has been in charge of the Fyffe group’s operations as managing director since 1989.
• He was appointed chief executive in 1995 and in 2006 became chairman.