Acquisitions the main ingredient for food group

KERRY Group aims to develop its business from €5 billion in sales to €10bn in the next five to six years through an active acquisitions strategy.

That was the message yesterday from chief executive Stan McCarthy when he addressed his first AGM as head of the food company that employs 22,000 worldwide.

The group reported a 7.5% rise in sales in the year to date and repeated its forecast for earnings this year of 151 cent to 155 cent per share.

Mr McCarthy told about 80 shareholders at the AGM, in Tralee, Co Kerry, that the group’s ingredients, flavours and consumer food divisions were performing well, with revenue up 7.5% on a like-for-like basis so far this year.

He paid tribute to his predecessor Hugh Friel, now retired, for his work which led to satisfactory results for the company.

Mr McCarthy said 2007 had been “almost anaemic” in relation to acquisitions by the group, but he expected significantly more activity on that front in the next year or two.

It was planned to further develop the company through strong organic growth and acquisitions, he said.

“We also believe further efficiencies can be had in the business. We’ve a good reputation in the industry and with our customers, very solid assets and a good distribution network,” said Mr McCarthy.

“There’s still room for acquisitions to grow the business, even in categories we are in.”

The acquisition of Dairygold spreads maker Breeo Foods for €165 million, announced in March, was not expected to have a material impact on earnings per share in the current year, Mr McCarthy said.

Also, he believed there was still plenty of potential in the Asia/Pacific market, which now accounted for 9% of sales even though Kerry had only started there about 10 years ago. That market showed a sales rise of more than 17% last year. Kerry now spends €145m, or 3% of its turnover, on research and development which, Mr McCarthy stressed, was critical.

“This might seem a very high cost, but without it our future would be relatively short,” he said.

He said the group had to keep abreast of changing lifestyles and leisure trends which increased consumer demand for more varied and convenient nutritional food and drinks products.

A questioner from the floor, describing a photograph of the group’s all-male board in the annual report as being like a Welsh male voice choir, asked if there were any plans to introduce women to the board.

“Even construction companies now have women directors,” he said.

Kerry chairman Denis Buckley, who said it was planned to reduce the size of the 18-member board by three this year, replied the gender issue was borne in mind when selecting suitably qualified people to fill seats on the board.

Kerry Group has manufacturing facilities in 19 countries and sales operations in 140.


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