Kerry predicts earnings hike

FOOD maker Kerry Group says it expects to increase earnings per share by over 10% per year over the next five years and said it was on track to hit its earnings forecast for 2011.

Kerry, Ireland’s third biggest listed company by market capitalisation, posted 2010 full-year earnings per share of 195c in February and said it expected that to grow to 210 to 218c in 2011.

In a presentation to investors on its five-year plan, Kerry said like-for-like volume growth rate would increase to 3-5% per year from 2-4% in recent years.

Volume growth in ingredients and flavours, which represents about two-thirds of revenue, will be roughly double that in the consumer food section.

Kerry is targeting an average 30-basis-point per annum improvement in margins over the next five years, the company said in a statement.

Its financial return target ratios remain above 15% for return on average equity and above 12% for cash flow return on investment , the statement said.

“It would be disappointing if they weren’t to raise margin guidance,” said Alicia Forry, a London- based analyst with Collins Stewart Hawkpoint, who has a “buy” recommendation on the stock.

Growth will be driven by the success of the company’s restructuring, an increasing presence in emerging markets and its research and development activities, analysts said.

Goldman Sachs Group analyst Fulvio Cazzol wrote in a recent note that Kerry may “decide to update the group’s goals and long-term targets” particularly its five-year margin target of 10%.

Additional reporting Reuters and Bloomberg