Kerry Group shares surge as revenues top €7bn

Kerry Group shares closed 4% higher on its annual revenues passing the €7bn mark for the first time and it saying that its supply chain has avoided any major hit from the coronavirus outbreak in China.

Kerry Group shares surge as revenues top €7bn

Kerry Group shares closed 4% higher on its annual revenues passing the €7bn mark for the first time and it saying that its supply chain has avoided any major hit from the coronavirus outbreak in China.

Kerry employs 1,100 people in China across five manufacturing facilities and one technology and innovation centre.

The Tralee-headquartered food, ingredients and nutrition group said it expects to take a financial hit this year in China, but only partly due to the coronavirus.

Kerry said its first quarter 2020 revenues in China will fall 30%, equivalent to a 0.5% drop in global revenue for its main Taste and Nutrition division and a 1% dip in earnings per share. Its Chinese plants are back working, but only at around 30% capacity.

“The vast majority of what we’re manufacturing in China is sourced in China and sold within China. We don’t have a big exposure from a supply chain standpoint,” said Kerry CEO Edmond Scanlon.

He said Kerry’s struggles in China are being driven more by a fall in consumer demand than from the virus.

Mr Scanlon said it is “way too early” to say how Kerry’s earnings may be affected if there is a wider hit on the global economy from the coronavirus. But, he said Kerry wasn’t seeing any impact outside of China. China currently generates 5% of Kerry’s total annual revenues.

Mr Scanlon said the Asia-Pacific, Middle East and Africa markets will contribute more to revenues than Europe in the not too distant future.

Factoring in the China hit, Kerry has still forecast adjusted earnings per share growth of between 5% and 9% for 2020, as a whole.

Kerry reported a 12% increase in trading profit, for 2019, to €903m; with group revenue rising by just under 10% to €7.2bn. The taste and nutrition division drove overall growth, with revenues growing by 4% to €6bn.

Despite losing out on a mega-deal to buy US conglomerate DuPont’s nutritions business last year, Mr Scanlon said Kerry will likely match its €562m 2019 acquisition spend this year and will consider any transaction — no matter what size — as long as it boosts shareholder value.

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