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Total Produce Pre-Close Statement: What The Analysts Said

By Steve Wynne-Jones
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Total Produce Pre-Close Statement: What The Analysts Said

Total Produce has issued a pre-close statement in which it said that it is targeting adjusted EBITDA growth in the mid-single-digit range, excluding the 45% Dole contribution for the five months ending December 2018.

For 2019, the company is targeting an increase in the adjusted earnings per share in the mid-to-upper single-digit range, including the Dole operation.

Here's how leading industry analysts viewed the statement:

Darren McKinley, Cantor Fitzgerald

"Post a period of Total Produce management consistently beating guidance for a number of years, investors have reacted negatively to management comments that oversupply of some fruits have led to weakness in pricing. With management guiding for 5-10% earnings growth in 2019, historically managements conservative guidance would imply that the company can deliver to the top end of guidance (15c earnings per share) in 2019.

Further to this, the $300m acquisition of a 45% stake in Dole was widely recognised by both management and analysts that this was a value accretive acquisition and sets up Total Produce well for long term growth. Total Produce issued 63m (19% of market cap) shares at €2.30 to fund the acquisition that will add an additional €1.7bn of revenue (50% of Total Produce revenue in FY 2017).


"There is a mechanism in place that will permit Total Produce to acquire the balance over the medium to long term. The McCann family vehicle bought c.€30m worth of shares in the placement to fund the Dole transaction."

Richard French, Davy Stockbrokers

"Against the backdrop of recent industry challenges, Total Produce has revised its full year guidance for FY 2018 and 2019. Adverse weather has impacted the supply-demand-price equation across several regions, while Dole navigates consecutive industry product safety notices in North America.

"Adjusting our forecasts to the lower end of the new FY 2019 guidance range implies an adjusted EPS of 14.1c (10% cut) – predominantly driven by the minority position in Dole. This revision interrupts a multi-year cycle of positive earnings momentum."

Patrick Higgins, Goodbody Stockbrokers

"While FY18 LFL adjusted EBITDA growth will likely be in-line with the guided mid-single digit range, LFL adjusted EPS (i.e. excluding Dole and the capital raise) will likely be flat year on year. This implies a 2.5% reduction on our current estimates and relates to extended periods of unusual weather which led to periods of over and under supply throughout the year.


"Today’s announcement reflects well-documented industry challenges, notably: i) difficult weather conditions in Europe; and ii) the N. American salads industry due to multiple ecoli outbreaks. We note Total Produce’s share price is down c.35% ytd (and 12% in the past month) as these challenges have weighed on the stock. After adjusting forecasts for today’s announcement, we estimate that Total Produce trades on c.11.7x FY19 PE at current levels."

© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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