Kerry reinstates earnings guidance as review of dairy business continues

CEO tight-lipped about restructuring plans as group release healthy first-quarter figures
Kerry reinstates earnings guidance as review of dairy business continues

Kerry Group is eyeing 11%-15% growth in earnings per share amid strong sales in the retail channel while foodservice continues to be impacted by restrictions in many markets.

Kerry Group has reinstated earnings guidance for the first time since the Covid crisis hit, and has reaffirmed that the strategic review of its dairy business is continuing.

However, it has refused to say anything more about shelved plans to sell the division to lead shareholder Kerry Co-op.

Addressing a shareholder question at Kerry Group’s agm, chief executive Edmond Scanlon said it would be “completely inappropriate” to comment on any confidential discussions.

Earlier this month, Kerry Group suspended transaction talks with Kerry Co-op, casting doubt over the potential sale of the €800m-valued dairy products business.

Talks floundered

A joint-venture ownership structure for the dairy business — which covers brands such as Cheestrings and Dairygold, as well as Kerry Group’s dairy processing business and agri-business stores — and, ultimately, outright ownership by Kerry Co-op, had been the favoured option.   

However, talks are understood to have floundered on valuation and financing. It is believed the review of Kerry’s dairy business may now last for much of the year.

Aside from the restructuring, Kerry Group reported a decent performance for the first quarter of the year, capped by it offering its first full-year earnings guidance since the onset of the Covid crisis.

Positive business momentum

Kerry said overall business volumes grew 1.9% in the three months to the end of March, with 2% growth evident in its core taste and nutrition division and 1% growth in its secondary consumer foods business.

The group said it expects adjusted earnings per share growth of 11%-15% this year.

“I am very pleased with the business momentum we saw as we moved through the quarter,” Mr Scanlon said: 

Our performance reflected sustained strong growth in the retail channel, while the foodservice channel continued to be impacted by increased restrictions in many local markets, before returning to growth in March.

Unilever beat forecasts

Meanwhile, a boom in home eating helped food and consumer goods giant Unilever beat forecasts in the first quarter.

Underlying sales rose 5.7% over the three months to the end of March. 

Hellmann's mayonnaise and Knorr soups were among brands to enjoy robust demand.

A strong recovery in China was another driver behind the gains. Sales grew at a double-digit rate there, and in India.

Now the maker of Marmite spreads and Ben & Jerry's ice cream says it will buy back up to $3.6bn (€3bn) of shares.

Confident of growth

The group is confident of hitting mid-term growth targets — which some analysts had previously doubted.

Unilever said it's also making good progress on splitting off its slower-growing Elida beauty and tea business.

That will mainly feature brands focused on Europe and North America, including Q-Tips and Timotei shampoo.

The new numbers come a week after Unilever's arch-rival Nestle reported its biggest jump in quarterly sales for a decade.

• Additional reporting Reuters

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