Geest earnings blighted by banana black death: Oversupply in Europe contributes to pounds 3.8m loss

A slump in the price of European bananas combined with an outbreak of fungal disease in Costa Rica to send Geest, the fruit company, into a pounds 3.8m loss in 1993 following a pounds 3.1m profit last time.

About 2.9 million boxes of bananas were lost after Black Sigatoka struck the group's Costa Rica plantation. The pounds 8.9m cost - pounds 3.1m of which relates to 1993 profits and the rest to 1994 - was charged as an exceptional item. Together with a pounds 4.6m charge for restructuring, this pushed the fresh produce division into a pounds 7m loss before interest.

The division's profits were also hit by oversupply in the European market because of a delay in introducing the new import regime. Profits before exceptionals fell from pounds 14.8m to pounds 5.7m, although sales were held at pounds 525.3m.

David Sugden, chief executive, said the 1994 quota, which allows 2 million bananas to be imported from Latin America, should lead to a substantial improvement in returns.

The group's food preparation business, which supplies salads and pasta to supermarkets, suffered a slight fall in operating profits from pounds 5.2m to pounds 5m due to the pounds 1.2m cost of starting a pasta factory. Excluding that, profits were ahead by 23 per cent.

Geest's results in 1992 had been depressed by a pounds 16.1m loss on the sale of three businesses, which meant that the group made a 3.8p loss per share. In 1993 that doubled to 7.6p, but the dividend was held at 8.1p via a 4.4p final. The group said it expected the dividend to be covered this year.

The City had expected poor results following two profit warnings but the shares dropped 4p to 262p.