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FACTS: Total Produce has reiterated (May 18th) its previous guidance for a FY EPS out-turn in the range 7-8c (Davy: 7.6c).
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ANALYSIS: Little detail is given in the statement and it does not guide on current trading. Given the macro backdrop and the well-versed difficulties that retailers across Europe are facing, the company's reiteration of guidance is encouraging. We are currently forecasting an EPS out-turn of 7.6c and this will remain unchanged following this morning's announcement.
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DAVY VIEW: The confirmation of guidance is welcome in a market where companies across a range of sectors are struggling to meet targets. This highlights the defensiveness of the Total Produce model. It has leading positions in core markets across Europe, selling products that consumers demand. Fruit and vegetables remain key selling items for retail and in recent months we have noted comments by the large UK multiples that it is a category earmarked for investment.
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In markets where investors are struggling to find a safe home for cash, one could do worse than look at Total Produce. It has consistently generated impressive returns over its cost of capital, free cash-flow generation is robust and its dividend is safe and growing, yielding in excess of 4%. In a world where US 10-year yields earn less than 2%, this looks very attractive.
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