Kerry boss: Results ‘extraordinary’

Never likely to lose the run of himself and indulge in over-the-top histrionics, one can truly tell Kerry Group is in good shape and on the right track when Stan McCarthy uses terms like “extraordinary” and “optimistic” to describe current group performance and outlook.

Kerry’s chief executive for just over five and a half years — his appointment to the top job coming 32 years after he initially signed up to the food giant’s Graduate Recruitment Programme — Mr McCarthy has been at the heart of the group’s relentless financial and geographic growth over the past few years.

Speaking on the back of a strong — and better-than- anticipated — set of first-half results, which he called “extraordinary”, given market challenges; he talked of the importance of emerging markets, the potential future benefits from the ‘1Kerry’ transformation programme and R&D spend, and the freedom afforded by a strong balance sheet.

While Kerry’s first half performance was largely driven by its core ingredients/flavours division, management still offered positives for the consumer food unit, where revenue fell by nearly 6% year-on-year. Mr McCarthy noted good underlying performances from the Brands Ireland and UK Brands businesses — which include the likes of Galtee, Denny, Dairygold, Low-Low, Richmond and Mattessons — and said that the group was “more optimistic, regarding the Irish market, than before” and “quite optimistic, regarding the UK, even though its flattish right now”.

While the decision not to further increase the full-year adjusted earnings per share growth outlook of 7%-11% was noted by some commentators, Mr McCarthy explained it on potential currency headwinds at the back-end of the year.

Any further acquisitions are likely to be in the nutritions business and centred on developing markets — where Kerry is anticipating 10% volume growth per annum up to 2017. Already nearly a quarter of ingredients & flavours revenue is coming from developing markets — China, Asia-Pacific, India, Latin America, Eastern Europe and Africa. Kerry stressed, however, that further growth in such markets will come about via its own progressive business model and less through “opportunistic” reasons like this week’s incident of a contamination scare concerning infant formula being sold into China by New Zealand dairy giant, Fonterra — a sub-sector of the market being seen as a huge sales opportunity for both Ireland and Kerry Group.