Shares benefit as profits rise to €298m and sales reach €4.9bn

KERRY’S results for last year showed profits rose by 35% to €298 million, while sales pressed ahead by 6.7% to €4.8 billion for the year.

The markets responded well and shares rose 1.5% to €20.65 which is up marginally from €20.46, the price the shares traded at this day last year.

Earnings per share rose 7.4% to 143.8 cent, with new chief executive Stan McCarthy predicting EPS could rise to 155 cent in the current year.

The group has declared a final dividend of 13.9 cent, up 11.2%, while its trading margin rose 10 basis points to 8.4% as Kerry passed on higher costs to its broad customer base.

In a note on the results, food analyst John O’Reilly of Davy Stockbrokers said with the focus on exploiting the group’s food technology with a view to serving the broad customer base group, Kerry could be heading back towards double digit earnings in 2009.

Assuming constant margins, this would re-excite the group’s rate of earnings growth.

Recent weakness of sterling (as regards translation and transaction), in particular, will temper EPS growth in euro this year. Nonetheless, momentum in the business appears such that we are sticking with our 2008 EPS forecast of 152.3c (which is at the low end of the guided range of 151c to 155c), said Mr O’Reilly.

Benefits from its new customer-centric focus — which will see a more integrated technology and applications approach — along with plant rationalisation, should start to flow this year and continue into next year, he said.

At today’s currency rates, 10% EPS growth for 2009 was “doable”, a rate of increase which could be accelerated if significant acquisition spending occurs this year, he said.

Mr McCarthy said acquisitions would be part of the group’s strategy going forward, but stressed that organic growth would be vital in driving growth in the coming years.