Online Extra: No. 98: Fyffes
SALES: 2.15 billion euros
Can Ireland's small economy produce another world champion à la Ryanair (RYAAY )? Such are Fyffes' lofty ambitions. The Dublin-based company is already the European leader in the distribution of fresh produce, with 5% of the market. And with a 200 million euro cash pile, it's ready for a big bid. "We're still relatively small," says Fyffes Chairman Carl McCann. "We would love to double our size within five years. It would not be completely unrealistic."
The soft-spoken, bespectacled Irishman is the third generation of McCanns to head the company. The enterprise was born in 1888, when its first commercial shipment of bananas arrived in London from the Canary Islands. Pathe newsreels from 1945 show British children getting a postwar lesson on how to eat what was then an exotic fruit.
Today, Fyffes sells nearly every kind of fruit and vegetable. But bananas still account for a quarter of all sales and remain a key factor in earnings growth. Fyffes logged pretax profits of 110 million euros on sales of 2.15 billion euros in 2004. Sales and pretax profits were up 17.7% and 57%, respectively, in the first half of this year.
In a highly fragmented industry filled with small players, Fyffes looks like a giant. The Irish company, which commands a 17% share of the European market for bananas, was once a takeover target for the likes of Dole Food. But now, Fyffes is on the hunt itself. Since going public in 1981, it has spent 489 million euros on 24 acquisitions. It recently paid 100 million euros to buy its way into both the Scandinavian and Czech markets.
The next deal, says Liam Igoe of Dublin stockbroker Goodbody, could be in the range of 600 million euros: "I believe Fyffes will either make a significant acquisition or merge with one of the bigger banana players." McCann won't reveal who his targets are but acknowledges the company is "in discussions with a number of people." With Fyffes's stock up 35% this year, McCann, 52, certainly has the currency for a big acquisition.
HILL OF BEANS.
In his battle to become the top banana, McCann draws inspiration from another compatriot, Anthony J.F. O'Reilly, the former chairman and CEO of H.J. Heinz (HNZ ). O'Reilly, over the course of nearly two decades, oversaw the Heinz's transformation into a global food giant.
"When somebody shows you what's possible, like O'Reilly did in the very tough American business scene, we would all like to aspire to something greater," says McCann. Clearly, this Irishman isn't hoping to get by on just luck.