€5.85bn revenues last year at food giant

Kerry Group’s pre-tax profits of €121.9m last year were down from €315m in 2012, but the markets yesterday reacted positively to the bigger picture of stable revenues of €5.85bn, against €5.84bn in 2012.

The pre-tax profits were hit by costs related to the selling off some food subsidiaries and a number of strategic investments.

After-tax profits rose 10.3% to €453m, and earnings per share were at 257.6c against 233.7c the previous year.

Kerry’s share price rose almost 2% yesterday, closing at €53.05, up €1.02.

Subdued sales in the foods division, at 0.1% annual volume growth, reflect the continuing low confidence of consumers globally.

Investment interest focused on Kerry’s 4.1% annual growth in ingredients and flavourings, which account for around 80% of overall revenue. The group has investment plans for this sector, notably to create a global technology and innovation centre in Singapore.

The group’s new EMEA innovation centre in Kildare is now fully functional, though in temporary premises. Its new building will open in January 2015. It also plans to restructure its Kerry Foods division.

Based on current exchange rates, Kerry expects to achieve 6% to 10% growth in adjusted earnings per share to a range of 273c to 284c per share in 2014.

Chief executive, Stan McCarthy, said: “Our performance reflects continued business margin improvement and strong cash generation. We are well focused on our targeted nutrition, taste and developing market platforms for growth.”

Kerry reported non-trading items of €393.8m before tax, or €352.2m after tax. It reported acquisition and restructuring costs of €189m after tax, including its spend on integrating acquisitions, rationalising its manufacturing footprint, and costs linked to the innovation centre. It also incurred losses of €54.3m after tax on the disposal of some non-core businesses.

Davy Stockbrokers said: “The re-organisation of foods will result in an utterly remodelled platform for accelerated growth and future development.

“The innovation centre in Singapore will be supported by regional development and application centres in China, India and Thailand.

“Five regional customer centres will also be founded in Indonesia, Japan, Korea, Vietnam and the Philippines. Such a scale of investment reflects Kerry’s confidence in underlying organic growth prospects and returns.”