Kerry set to complete Red Arrow deal
Red Arrow, which is a leading supplier of natural smoke flavours and savoury grill flavours to various food companies, was one of three ingredients businesses Kerry acquired last month, for a combined €645m.
Red Arrow was the largest of the deals, making up around two thirds of the total consideration.
The other purchases, beverage and cocktail mix provider Island Oasis and immune system strengthening ingredients firm Wellmune, have already been completed.
However, the Red Arrow deal has required regulatory clearance in a number of geographies, therefore taking longer to complete, but that should be done in the coming weeks.
Speaking last month about the prospects for further expansion, a Kerry spokesperson said the group has a very strong balance sheet and the business can continue to grow organically and via acquisition.
The update on the latest acquisitions came on the back of Kerry’s latest interim management statement yesterday.
That showed a year-on-year increase of 3.2% in business volumes for the nine months to the end of September, some 0.5% ahead of some analyst expectations. Volume growth in the taste/nutrition and consumer foods divisions, up 3.4% and 2.6%, respectively, also beat estimates.
“This implies a 4.3% increase in the third quarter, which compares with 3% in the second quarter and 2.5% in quarter one,” said Liam Igoe, food analyst with Goodbody Stockbrokers.
Kerry’s net debt stood at €1.4bn at the end of September, with the net debt-to-EBITDA level set to reach between 2.1 times to 2.2 times by the end of this year on the back of the new purchases.
Management said the group has maintained a “solid business performace” against a tough backdrop in the past three months.
That backdrop includes continually weak consumer demand in a number of developed markets, despite improving economic conditions, and geopolitical issues and currency fluctuations hampering growth in developing regions.
“Taste & Nutrition delivered good growth in the American markets, an improved performance in the EMEA region and solid market development in Asia-Pacific markets, notwithstanding the slowdown in some regional devleopment markets.
"Kerry Foods performed well in the changing and competitive consumer foods market environment in Ireland and the UK,” yesterday’s statement said.
Kerry’s share price was marginally down, at just under €72, yesterday.
