Kerry profits rise €30m in tough year
Nevertheless the results were in line with market expectations, with pre-tax profits up at €298 million from €268.6m in 2004.
Earnings per share at 131.6c met expectations, while turnover for the year rose 7% to €4.4 billion. Operating profits rose 7% to €380m while the group trading margin overall was maintained at 8.6%.
Chief executive Hugh Friel said the performance was “solid”, given the challenging year faced in which raw material costs also rose.
The results include a €24m currency translation cost and an exceptional charge of €3.6m related to restructuring.
After tax profits increased 16% to €236m while the group raised the final dividend by 15.8% to 11c per share, giving a full year dividend of 16c per share, an increase of 14.3%.
Group free cash of €248m, was in line with forecasts and R&D spending increased to €125m or 2.8% of sales, up from 2.6% in 2004.
Ingredients sales increased by 9% to over €3bn for the first time, with sales in Europe edging ahead of the Americas at this stage.
Like-for-like sales growth of 5% was achieved while margins in the ingredients division were unchanged at 9.4%.
Mr Friel said if he could add a few more basis points to that figure next year, he would be well satisfied, given the circumstances of the market.
European ingredient sales increased by 9% and the Americas by 8%, he said.
Consumer food sales rose 4%, with like-for-like growth of 2%, while divisional margins were also unchanged at 7.1%.
The market for frozen ready meals declined by 15% in the year.
While Kerry’s Rye Valley business increased market share, profits declined.
Demand for chilled ready meals slowed dramatically in the second half as growth slipped from 12% in first half to 4% in the second six months.
In Britain negative statements from celebrity chefs about the nutritional value of frozen food offerings in particular hit sales in the two categories.
It will take time for the British market to recover but Mr Friel said he expected the chilled sector to bounce back faster than the frozen end of the business.
Kerry has about 20% of its convenience food sales tied up sales in those two categories.
Food ingredients account for 64% of total turnover and the convenience foods sector 36%. Convenience foods serves the British and Irish markets only.
Kerry is confident about the future and expects to meet market forecasts again this year, with earnings growth of 7%.
Most analysts regard the shares as a buy at current levels.
They fell 10c to €18.55 having been down 15c earlier in the day.
