Kerry Group maintains guidance despite tough first half

Kerry Group has reiterated its full-year earnings guidance despite seeing a 6.5% annualised fall in first-half profits and only marginal revenue growth.

The Tralee, Co Kerry- headquartered international food and ingredients group yesterday reported an after-tax profit of €222.4m for the first six months of 2016; down from nearly €238m in the same period last year, as it battled with a continually challenging market landscape.

First-half group revenue crept up by 0.3% to just over €3.03bn.

Management is still expecting adjusted earnings per share this year to grow by 6% to 10%.

However, speaking yesterday chief executive Stan McCarthy said the result would be nearer the lower end of its guidance range. He said the first-half performance was solid.

“While we are confident of delivering an underlying trading performance in the full year, as previously guided; taking into account the increased currency headwinds of 5% at current exchange rates, growth in adjusted earnings per share in 2016 is expected to be towards the middle-to-lower end of the 6% to 10% range of 320c to 332c per share,” he said.

Mr McCarthy also noted Kerry’s 7.4% growth in first- half trading profit to €322m, the similar-sized growth in first-half adjusted earnings per share and a 12% rise in interim dividend.

Revenues rose 3.5% in the key taste and nutrition business, with trading profit nearly 8% head of last year.

That division saw a solid performance in north America, boosted by improvements in South America.

The continuing competitive nature of the UK and Irish consumer foods market saw that aspect of the business struggle, with profits down nearly 4%.

Net debt fell €130m to €1.52bn in the first half.

Despite the challenges facing its consumer foods, Kerry performed well in the chilled and frozen sectors in the UK.

Regarding Brexit, while management said it remains too early to quantify the longer-term implications of the vote, consumer confidence has weakened.

However, the group said it remains “well-positioned to address the challenges and opportunities that this decision may present”.


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