Last year, Fyffes' and Chiquita's merger plans failed. This did not have any direct consequences for the banana giant's financial results, but the oil price and changes in the exchange rate do have consequences. In an interview with the German Lebensmittel Zeitung, CEO David McCann talks about his motives for the deal, and his vision for the future.
Transport is a big expense in the banana sector. source: fyffes.com
Both companies saw positive aspects to a merger, and although Chiquita hasn't always achieved a strong result in recent years, Fyffes had room to increase its debt. "Fyffes and Chiquita operate in a similar fashion in the European marketplace and have very big transportation costs," David says. "For instance, we both charter ships and space on ships across the Atlantic in a similar way. So we could have been more efficient through combination on what is, after all, a mature market."
Looking to the future, David says that Fyffes wants to keep growing in the banana, melon and pineapple market. "First in our own market, in our home market, which is north-western Europe, and then to spread out from there in both nearby geographies and further-away ones." He does see a challenge for the coming year. "From a shipping perspective low fuel prices will definitely help costs in 2015, but this is nothing like as important as the currency problem. It is a simple reality that the banana and pineapple industries operate with products that are largely bought and shipped in US dollars, so the radical and sudden move in the exchange rate between the dollar and the Euro will inevitably lead to higher prices." Because of the small margins in the sector, this change will have to be charged to the buyers.
Read the full interview with David McCann here.
Read the full interview with David McCann here.