KERRY Group has no plans to forsake its Tralee roots by transferring its headquarters to the US.
That assurance was given by group chief executive Stan McCarthy, who launched another set of impressive trading figures for the group’s first half year in Dublin yesterday.
McCarthy, who has continued to live in the US since becoming boss of the world’s biggest food and flavourings business, said the group’s “heritage” was of huge importance to the group and that meant it would remain firmly anchored in Tralee, Co Kerry. By setting up a head office in London or the US “we’ll lose all that”, he insisted.
In effect the option of taking the headquarters out of Tralee appears to be a non-negotiable item as far the group is concerned.
While much of what Kerry is today can be traced back to its entry to the US ingredients market in 1988, it has never forgotten its roots.
So there you have it. Kerry Group and the Kingdom are synonymous and that’s that so to speak.
It has evolved into the leading ingredients and flavours business in the world and looks set to retain the position.
As the group has demonstrated over the years, being in rural Ireland has never meant its policies have been either parochial or provincial. The takeover of Beatreme in the US in the late 1980s demonstrated the group, despite its Tralee base, had a global vision.
It has gone on to develop that over the years through about 150 takeovers.
What’s been impressive too is that its purchases have for the most part always been retained by the group.
That reflects the clear focus articulated by the first chief executive of the group, Denis Brosnan, and his close allies, such as Hugh Friel, the original financial controller, who took over from Brosnan as chief executive.
Unfortunately for Friel the business lagged a lot in his later years at the helm, and some of us argued Kerry’s crown was starting to slip. Its double-digit earnings profile waned and some feared it might be very hard to get back.
But it was group policy never to pay over the odds for a business and during Friel’s term, private equity started to drive the cost of businesses through the roof.
Kerry stuck to its principles of ensuring any deal delivered a good return on investment. And now that the big private equity houses are not the dominant force anymore Kerry is well placed to get back on the acquisition trail.
McCarthy made it clear all options were on the table in terms of future deals.
When appropriate, Kerry will do a multi-billion euro acquisitions to enhance its dominance in the ingredients and flavourings sectors.
This is the core focus of the group. There has been speculation McCarthy will sell the consumer division, which has major brand names in Britain and Ireland, including Wall’s, Mattessons Richmond, Denny, Shaws and Dairygold.
Kerry has consolidated its position in the sectors it serves in both Ireland and Britain. But when asked if he would be interested in adding Greencore’s convenience food range to the Kerry range in Britain, he said that was not a priority.
Getting the most out of the consumer businesses would remain a constant challenge, but the same will apply to the ingredients and flavourings businesses.
There seems little doubt that McCarthy sees the real engine of growth in Asia and South America.
While selling the consumer business may not be necessary to advance its plan, if a major acquisition is completed in the next few years it could prompt an exit from the sector.
Either way, Kerry looks to be on a strong growth trajectory, with double-digit earnings growth and major acquisitions all part of the scenario, with Tralee providing the heartbeat.
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