Kerry narrows earnings guidance

Kerry Group has narrowed its full-year earnings guidance in the face of challenging market conditions and “significant currency headwinds”.

Despite this, the Tralee-headquartered international food and ingredients giant still sees a chance for earnings to show a low double-digit percentage increase for the current year; significant given the deterioration in exchange rates compared to earlier in the year.

In its latest trading update — covering both the third quarter and the first nine months of the year — Kerry yesterday stated it is confident of delivering 8%-10% growth in adjusted earnings per share for 2013, to a range of 253c-257c.

Back in August, when it published better-than-expected half-year results, Kerry’s management said that it was aiming for adjusted earnings growth of between 7% and 11% — which would have resulted in a full-year outcome of between 250c and 260c.

Even so, yesterday’s update represented broadly positive reading. In the three months to the end of Sep, the group achieved “a good business performance”, despite the aforementioned currency difficulties and “a challenging overall market environment in developed markets.

“Despite weaker economic conditions in some developing markets, Kerry continued to achieve solid growth and business development — particularly in the Europe, Middle East and Asia developing zones. Performance was assisted by successful integration of acquisitions and good results, to date, from continuing deployment of the group’s ‘1 Kerry’ business transformation programme,” the company said.

In the first nine months of this year, continuing business volumes grew by 2.9% — 4.1% at its dominant ingredients and flavours division. Overall reported revenues were down by 0.2%, however, on the back of currency issues and the discontinuation of some non-core activities.

Regarding its consumer foods division (which covers such brands as Denny, Galtee and Dairygold) Kerry said it performed well against a background of tough competition from discount retailers and private label offerings. The group’s consumer foods division suffered a 6% year-on-year decline in revenues in the first half of the year; but any decent performance in the year to date has been via its branded goods in the UK market. Both the UK and Irish consumer foods sectors remain “highly competitive” the company said. Reported revenues in this division were down by 7.3% in the first nine months of the year.

Yesterday’s update also said that the integration of recent acquisitions is nearing completion and that group net debt stood at €1.2bn as of the end of Sep.

Kerry’s shares were up by just over 1.6% at €47.10, yesterday.