Food giant Kerry Group set to act on ‘strong’ Asian deal pipeline

Kerry Group outgoing chief executive Stan McCarthy at the Westin Hotel. Picture: Colm Mahady/Fennell

Kerry Group has said it will make more acquisitions before the end of the year, with small bolt-on buys likely in the increasingly key Asia-Pacific region.

There had already been more than €80m in that region in purchases this year, but Kerry stressed yesterday it would also be eyeing purchases in the Americas and Europe. The group has an estimated spend capacity of €1bn for the next 18 months.

Incoming chief executive Edmond Scanlon said the group has a strong pipeline of acquisition targets in Asia, but they “will take time” to come to fruition, with Kerry’s immediate future in the region likely to be more of an “organic growth story”.

Management sees it as being important to take a pan-Asian view, but said its expansion there will be made on a country-by-country basis.

Kerry’s share price jumped nearly 4% yesterday, despite management lowering its full-year earnings expectations.

The Tralee-based food and nutrition group reported a 4.8% year-on-year increase in group revenue for the first half of the year, to €3.2bn; helped by strong volume growth in both the taste and nutrition and consumer foods divisions.

Group trading profit rose by 5.2% to €338m, with adjusted earnings per share up 7.5% at 143.8c. Kerry has upped its interim dividend per share by 11.9% to 18.8c. Revenue in the core taste and nutrition division grew 4.2% to €2.54bn, while the consumer foods arm saw growth of 2.3% to €677m.

“Against a backdrop of significant adverse currency movements, we achieved a strong overall business performance in the first half of 2017,” said Kerry’s outgoing chief executive, Stan McCarthy.

Those currency headwinds are likely to increase, leading Kerry to lower its full-year adjusted earnings per share guidance from 5% to 9% to 3% to 7%. Underlying growth is still set to be around 2% this year.

Analysts had anticipated the narrowing of guidance and Goodbody Stockbrokers said it would likely keep with its 4.6% earnings per share growth outlook.

Mr McCarthy said that management believes Kerry’s organic growth will be sustained, despite headwinds.

On a geographical basis, Asia-Pacific — set to feature when Kerry unveils its new five-year plan in October — remained the strongest market for the taste and nutrition arm, with business volumes growing annually by 10.3% and reported revenues rising 14.2% to €419m.


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