Kerry Group's profits rise by 12%
Despite tough trading conditions and currency translation losses pre-tax profits rose 12% to €131 million on turnover up 8% to €2.1 billion.
Chief executive Hugh Friel said the company had generated the numbers in the face of "a highly competitive trading environment, exacerbated by energy and raw material cost increases and adverse currency movements."
He expected the full year outturn to be in line with market expectations.
Adjusted earnings per share were up 6.5% to 53.8 cent, while an 11% higher interim dividend of 5c has been declared.
Shares in the group took a pasting following the announcement of the figures and by mid-afternoon the price had fallen 79c from €20.65, close to its high for this year, to €19.86, a drop of 3.83% on the day.
Results form the consumer division bear out the competitive pressures referred to by the group.
While sales rose 1.5% to €820m, operating profits were flat at €55m as rising costs and tough competition in Britain ate into returns.
Kerry is a major player in consumer foods in both Britain and Ireland, the main markets it serves in that category.
Walls pies and sausages is one of its better known British brands while Denny is one of its Irish flagship offerings.
In food ingredients the results were better.
This division accounts for two thirds of the overall business.
Profits at Kerry's food ingredients division grew 10% to €118m, boosted by sales that were up by 12% at €1.5bn.
An increased focus on nutrition based products boosted European sales while turnover in the Asia Pacific region was well up at 26.5% to €160m.
In the first-half the margins enjoyed by the group suffered from competitive pressures and other costs and fell to 7.6%.
In the past two financial years margins have risen by 0.1% year on year to 8.6% in 2004.
Traditionally the first half, which includes the soft January period, is always a lower margin period and Mr Friel is forecasting a significant improvement in the usually stronger second six months.
Analysts reacted s differently to the figures.
Liam Igoe of Goodbody Stockbrokers said the results were slightly below his expectations and he said the statement seemed a bit preoccupied with the competitiveness issue.
He doesn't expect to make much change in his full year forecast but will have to adjust for the acquisition of Noon in Britain.
For NCB the figures were in line with projections and it is forecasting an EPS of 6.9% for the year at 131.5c which will not change much following a fuller review of the first half.
