Kerry Group shares fell yesterday as the company held its annual general meeting in Tralee, Co Kerry, and reported “good business momentum” despite tough market conditions.
The company remains confident of delivering adjusted earnings growth of 6% to 10% in 2016 as it had previously guided.
Business volumes rose 2.9% with sales in its taste and nutrition division (3.1%) showing stronger growth (3.1%) than its consumer goods segment (2.1%).
However, the company missed analysts’ expectations for organic volume growth and pricing with its trading update, according to Merrion Stockbrokers senior equity analyst, Darren McKinley.
The company remains well-positioned for growth nonetheless, he added.
“Although these results have disappointed, Kerry Group continues to execute very well by delivering cost synergies, making bolt-on acquisitions which is helping deliver industry-leading volume growth.
"Kerry Group are perfectly positioned within the structurally growing ‘health’ and ‘wellness’ industry and continue to add some of the biggest food customers in the world as customers,” said Mr McKinley.
Shares in Kerry Group fell on the back of the update. They were down 2.25% by yesterday afternoon.
Having spent €888m on 10 acquisitions in 2015, the integration of these businesses into the group is progressing well, according to the company.
The group said that it maintained good business momentum while improving the quality of its businesses and achieving satisfactory growth in the opening quarter of the year.
Reported revenues rose 0.9% reflecting volume growth, lower pricing, currency headwinds of 2.3% and the effect of acquisitions net of disposals of 1.9%.
It said its solid innovation pipeline in response to customer requirements and greater demand from consumers for nutrition-based products helped sustain its performance in the face of challenging market conditions.
The company has also been able to capitalise on trends in snacking, convenience and food-to-go trends.
Those challenges are especially pronounced at present in the European, Middle Eastern, and African markets where deflationary pressures and geopolitical instability in developing markets persists.
Kerry’s taste and nutrition division saw strong 3.1% growth in the Americas while its performance in Asia-Pacific had sales volume growth of 8.7%.
Its net debt stood at €1.6bn at the end of March compared with €1.7bn at the beginning of the year and its balance sheet remains strong, it said.
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