Kerry Group has maintained its strong earnings growth outlook for 2017 on the back of a solid performance in the first three months of the year.
In a trading update, released to coincide with its annual general meeting in Tralee, Co Kerry, yesterday, the food and nutrition group said the first three months of the year saw good growth in the core taste and nutrition division as well as its consumer foods arm.
Kerry’s share price rose by over 3% on the back of yesterday’s news.
Speaking ahead of his last AGM as Kerry boss, outgoing chief executive Stan McCarthy said the momentum seen in 2016 has carried into this year. He said the group “expects to achieve good revenue growth and 5%-to-9% growth in adjusted earnings per share in 2017, as previously guided”.
Mr McCarthy is retiring this year and will be replaced by Kerry’s Asia-Pacific boss, Edmond Scanlon.
In the first quarter, Kerry increased its business volumes by 3.8%. Growth of 4.1% in its key taste and nutrition division was slightly ahead of expectation, while the consumer foods arm saw growth of 2.3%.
The latter is driven mainly by strong sales of snacking products such as Cheestrings and Mattessons. It is significant as it proves growth is being maintained in the less significant consumer foods business, which includes brands such as Charleville, Dairygold, Denny, and Low-Low.
Earlier this year, analysts suggested Kerry might explore a sale of its consumer arm. However, when presenting the strong 2016 annual results in February, Mr McCarthy dismissed such speculation by saying “we have no intention, whatsoever, to sell that business”.
“In a food industry characterised by higher rates of new product development and product renovation, Kerry remains highly relevant,” said Declan Morrissey of Davy Stockbrokers after yesterday’s update.
Kerry also reiterated that its balance sheet remains strong enough to facilitate “the continued organic and acquisitive growth of group businesses”.
At February’s annual results presentation, Mr McCarthy confirmed the Kerry board’s intention to be “much more acquisitive [in 2017] than last year”, saying the group could spend “anything between a couple of hundred million and €1bn” in combined outlay.
Kerry was quiet on the acquisition front last year, choosing to focus on absorbing the €1bn worth of purchases it made in 2015. Already, two purchases worth €83m in Australia and China have been made this year and more in the Asia-Pacific region are expected.
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