Merrion Stockbrokers

Total Produce, €1.11

Guidance tweaked to high end of the range following strong trading

Total Produce has released a short, but positive trading statement this morning. The company has had a satisfactory trading period during the first four months of the year which has given management confidence to increase guidance for the full year profitability outturn at the company.

Management are now providing guidance that adjusted earnings per share in 2015 will be in the upper half of the previously provided range of between 9.2c and 10.2c.

Total Produce has also completed the acquisition of a 50% shareholding in Gambles Group, further increasing the company’s exposure to the North American market, which is attractive given underlying population dynamics and diet trends towards fresh produce. Gambles had 2014 sales of C$170 million and the acquisition marks the fourth company that Total Produce has been involved with in the North American market since 2013.

A final dividend of 1.76c (+6% YoY) has also been proposed for shareholders and will be paid on the 22nd of May.

We continue to believe that Total Produce offers compelling value for shareholders and that the company is well placed to continue to grow on an organic basis while also deploying capital from the company’s healthy balance sheet towards acquisitions. With the shares trading on c.11x earnings forecasts and also yielding over 2% for investors, Total Produce is very cheap on both a relative basis compared to peers and also on an absolute basis, given the significant growth in profitability that has been achieved in recent years.

Analyst: David Holohan – Head Of Research



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