Pre-tax profit hits €336m as shares soar to new high

INTERNATIONAL food and ingredients maker Kerry Group has delivered earnings per share at the upper end of market expectations for last year.

Pre-tax profit at the group hit almost €336 million, up 6% on the previous year.

In a tough trading environment, volume sales rose 2.2%, with ingredients up 2.9% while consumer sales were flat, reflecting tough trading conditions in both the Irish and British markets where its consumer division is focused.

The strong euro hurt sales over the 12 months but the group said the results represented “excellent progress” in a challenging environment.

Earnings per share at 166.5 cents rose by 8.2% and were at the upper end of Irish forecasters’ expectations. It is paying a final dividend of 17.3 cent per share, up 10.9% on the 2008 final dividend.

Kerry is now one of the largest quoted companies on the Irish Stock Exchange and shares in the group hit an all-time high by mid-afternoon at €23.35, up 60c, an increase of 2.64%.

The group’s previous high was back in 2007 when the Irish Stock Exchange was at its peak.

Group chief executive Stan McCarthy said the group adapted to the difficult market conditions by cutting costs, and shedding non-core businesses to meet the expectations of “value focused” consumers.

“Business performance throughout Kerry’s end-use markets continued to improve as the year progressed and the performance in Q4 was particularly encouraging,” Mr McCarthy said.

Pre-tax profits were €335.8m while total sales fell by 4.8% on a like-for-like basis to €4.5 billion.

But the group added that continuing business volumes were 2.2% ahead on a group-wide basis due to restructuring programmes, currency movements and the elimination of non-core activities.

The food group said that it is confident of delivering earnings growth in 2010 between a range of 182c and 185c per share, which will push earnings per share into double digit territory of over 10% for the first time since 2003, analysts said.

Kerry is the largest player in the ingredients and flavours markets which is worth over $50bn (€36.7bn).

Kerry last year generated over €3.2bn in sales from that sector and Mr McCarthy said the group will continue to build on its increasing global reach through acquisitions and via organic growth across the Americas and Asia Pacific where continued strong development is taking place in countries such as Indonesia.

Self-generated growth has been delivering well for the group and while some acquisitions are likely in the current year, Mr McCarthy said he wanted to stay focussed on the organic growth, the go to market strategy and other internal measures, that have delivered such good results in a challenging environment.

Even in its present form, Kerry group is capable of delivering strong growth as margins in continue to rise.

Ingredients and flavours have achieved a margin of 10.4%, up 80bps in 2009, while consumer foods rose 40bps to 7.1%.

The group owns some of the best know food brands in Britain and Ireland including Denny, LowLow, Wall’s and Mattesons. It acquired Breeo Foods last March adding Galtee, Dairygold and Shaws to its food mix.


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