Kerry Group shares bounce 4% despite price increases

Irish foods ingredients giant posts annual revenues of €8.8bn

'In 2023, we expect to achieve 3% to 7% adjusted earnings per share growth on a constant currency basis,' said Kerry Group chief executive Edmond Scanlon.

Kerry Group shares bounced by over 4% after the Irish foods ingredients giant posted annual revenues of €8.8bn, boosted by price increases as well as volume growth. 

Group sales growth of over 19% in 2020 was helped by a 6% rise in volume growth, price increases of 11.7%, as well as a small measure of favourable currency translations, the company said.    

Kerry Group is paying a final dividend of 73.4c per share, which means its total dividend has risen in 2022 by over 10% to 104.8c, it said. 

The company is pressing ahead with the previously announced plan to sell an ingredients business as it refashions the international business while "the overall demand environment remained robust through the year despite the macroeconomic backdrop", it said.

Its Dairy Ireland business posted revenues of €1.5bn, "driven primarily by increased pricing" amid mostly unchanged volumes "with the heightened inflationary cost environment resulting in significant price increases across the business", Kerry Group said.

"We completed a number of acquisitions aligned to our strategic priorities of taste, nutrition, and emerging markets, and since year-end we announced the potential sale of our sweet ingredients portfolio, as we continue to enhance and refine our business to areas where we can add most value," said chief executive Edmond Scanlon in the earnings statement.     

While recognising the current market uncertainty, we believe we are strongly positioned to continue to grow our business through this period. 

"In 2023, we expect to achieve 3% to 7% adjusted earnings per share growth on a constant currency basis, before the dilution from the potential sale of the sweet ingredients portfolio," he said. 

Broker Goodbody said that Kerry Group shares are trading at a discount to its international peer group and predicts that any "delivery against market expectations should lead to a re-rating in the stock".