Kerry profit up 8% to €175m despite cost increases

KERRY GROUP saw pre-tax profits jump by 8%, year-on-year, in the first half of this year to €175 million, with group revenue rising by 8.4% to €2.6 billion.

The Tralee-headquartered international food group said that its “solid” earnings growth — earnings per share were up, on an annualised basis, by 9.7% to 86.8c — and “strong volume growth” were achieved despite significant raw material and input cost inflation.

In spite of this pressure, Kerry’s chief executive Stan McCarthy yesterday reiterated the group’s confidence in achieving its previously stated growth targets for this year, which include full-year earnings per share growth of between 8% and 12%.

“We’re on track and are very optimistic about our business for 2011 and onwards,” Mr McCarthy added.

Kerry’s trading profit increased by 6.1%, to €214m, when measured against the same period last year and an 11.4% increase to the interim dividend for shareholders has been declared, with the first half payment rising to 9.8c.

The results also showed good regional growth for the group. Currently, 60% of Kerry’s annual revenue comes from Europe, the Middle-East and Africa region, with 30% from the Americas and 10% from the Asia-Pacific region.

Yesterday’s first-half figures demonstrated solid year-on-year revenue rises in each of those areas — a 9.8% rise in the Americas, 12.8% growth in Asia-Pacific and a 9.3% rise in Europe, the Middle-East and Africa.

Kerry’s management added that conditions in the consumer markets in Ireland and Britain “remain challenging” but it said that its brands in Britain continue to show satisfactory growth, while their performance has “stabilised” in the Irish market.

On the acquisition front, Mr McCarthy said that the deals for Headland Foods and Cargill Flavor Systems are “essentially” done, but will take the rest of the year to be completed.

He added that Kerry is interested in expanding in emerging territories such as India, South America, Africa, the Middle East and Asia. “We’re seeing high volume growth in emerging markets and we can’t ignore that. Those markets will play a huge part in Kerry’s future growth, but we remain committed to our western European operations also,” he said.

He added: “The deep market knowledge which we’ve amassed, coupled with our global reputation, enables us to capitalise on consolidation in the market and there are acquisition opportunities for us and we’re quite busy in thatregard.”

Kerry’s strong newsflow boosted its share price by 81c yesterday to €27.35.