Kerry Group ups earnings guidance after good first half

Kerry Group has upped its full-year earnings per share guidance on the back of a strong first-half showing, which saw profits rise by nearly 14% on a year-on- year basis.

Yesterday, the Tralee, Co Kerry-based food group, reported sales revenues of €2.9bn for the first six months of this year. That figure was up by 10% on the same period last year.

Adjusted pre-tax profits, for the period, amounted to €209m; up by 13.7% on 2011’s first half.

Stan McCarthy, group chief executive, called the performance strong, despite continuing levels of weak consumer confidence and slow economic growth.

Trading performance “progressively improved”, he said, during the second quarter of the year, in particular.

“The group is confident of delivering our full-year growth objectives,” he said.

On the back of the good first-half showing, Kerry’s management has upped its growth guidance for 2012, as a whole. Where previously Kerry’s full-year adjusted earnings per share was expected to be up by between 7% and 10%; management is now anticipating an increase of between 8% and 12%.

Adjusted earnings per share for the six months to the end of June rose by 14.3%, year-on-year, to 99.2c.

The company also upped its interim dividend, for shareholders, by 10.2% to 10.8c per share.

Kerry’s first-half growth was driven by a strong 14% annualised revenue increase in its ingredients and flavours division.

Asked about the slow- growth convenience food division — which saw revenue growth of less than 2% in the first half — Mr McCarthy said management’s commitment has not dwindled.

“Convenience foods remains a very strong cash generative business. You have to be committed to such a business during good times and bad times and we are still very committed to this business,” he said.

Mr McCarthy said Kerry will not budge from its branded label strategy in consumer foods, with its main brands — the likes of Richmond and Denny meats — performing well in Ireland and Britain.

On a geographical basis, Kerry’s first-half revenues grew by strong double digit percentages in the Americas, the Europe, Middle East and Asia region and Asia-Pacific.

Kerry — whose share price rose by 6% to €38.50 yesterday — added that it is continuing to make “good progress” on its business transformation programme; which, along with the integration of recent acquisitions, will see the company incur an estimated total charge of around €200m.