Kerry Group confident of full-year earnings hike

GLOBAL ingredients flavours and consumer foods group Kerry says it is confident of increasing earnings for the full year to the levels previously indicated of between 160c and 165c a share.

That compares with 159.3c generated last year, the company said in its latest trading update.

Kerry said progress and momentum in the first half of the year has continued into the four months to the end of October.

Overall sales for the first 10 months are down 6% on last year, reflecting the impact of currency changes and other developments in the group.

Lower pricing and the elimination of non-core activities associated with the restructuring centred on the “go-to-market” located in Beloit also affected sales, it said.

The full cost of that programme will be €80m this year net of tax.

Cost savings and margin improvement will be key in delivering stronger year earnings, Kerry said.

Business volumes were 3% ahead in ingredients and flavours, but were down 0.8% in consumer foods and were 1.5% ahead on a group basis.

Cashflows remain strong and net debt at the end of the period was €1.2 billion, €160 million below that reported at the half year despite the investment in the go-to-market programme being driven from the group’s centre.

This new approach, initiated by Stan McCarthy when he took over as group chief executive, continues to achieve solid results and a strong response from leading global food and beverage providers.

Underlying volumes reflect 3% growth year-to-date. The Americas region continued to achieve excellent results while Europe, Middle East and Africa region continued to see challenges due to the impact of economic conditions on food and beverage consumption trends.

Underlying volume growth of 2.3% was achieved nevertheless.

Regional economic conditions improved in the 10-month period while demand improved across most food and beverage industry sectors.

In the consumer division covering Ireland and Britain, which accounts for about a third of group earnings, the domestic market was tough.

In Ireland Kerry owns several brands including Denny brands and Breeo Foods, acquired earlier this year from Dairygold. That business has integrated well into the group, Kerry said. In Britain it owns brand leaders such as Mattesons, Walls and Richmond. Despite currency issues the division continued to make good progress.

Cheese and spreads performed “satisfactorily” in the Irish and British markets. The British business remained buoyant in a tough competitive environment and compensated for revenue declines in Ireland, Kerry said. Shares in the group ended down 0.7% at €20.27.