Kerry Group continue as leading suppliers
But then its that kind of group. Its performance over the years has been one of persistent high double digit growth driven by its global ingredients business and its strong role as a provider of chilled foods in the UK and Irish markets.
Kerry’s spread of activities covers the global ingredients and flavours markets while its consumer division has a strong focus on the Ireland and UK markets where it has a leading position supplying a broad spread of that highly competitive market.
The group can be rightly pleased with its 2002 performance with sales up 25% and like for like sales ahead by 6%.
Operating profits increased by 17% to €305m while the key adjusted earnings per share figure increased by 15.8% to 101.8cent, slightly ahead of some forecasts.
Over the period the group pushed through a further clutch of acquisitions adding to its dept as a leading provider of ingredients and flavourings in a market where it continues to be one of the key players for several years.
Group managing director, Hugh Friel was right to laud the strong performance of the group in 2002 as most encouraging.
It was achieved across all businesses and territories in what is a tougher market given the global slowdown. The group’s ability to deliver across all fronts is a further measure of the depth and scope of its reach as a major player in its chosen markets.
Keeping pace with consumer trends in one of the most rapidly changing sectors of the economy is no mean feat and the group has consistently delivered 15-20% earnings growth over the past several years, an achievement that has set it apart form most other companies irrespective of their chosen field of operation.
Until recently Kerry was the reference point for other food companies not just in Ireland, but in other markets as well, where its strategic focus on ingredients and flavourings on the one hand and on chilled/ consumer foods, provided a winning formula and saw it surge ahead consistently in terms of sales and profits.
That performance was driven by its highly acquisitive stance particularly in the ingredients and flavourings sector which resulted in highly strategic purchases going back to Beatreme and then followed by DCA and Dalgety.
At this juncture however the group is faced with a market that has matured in some respects, due to the amount of consolidation that has taken place.
In the food category major players have merged or been taken over the top strata 10 has become six.
And as we face into 2003 the outlook for Kerry becomes a bit less heady so to speak.
Projected earnings have fallen from the 15-20% category to closer to 10% going forward. That is assuming no major acquisitions of course, something that cannot be ruled out.
However this market has become more complex as the process of globalisation shrinks the acquisition field and future growth looks like it may be predicated more on organic than strategic acquisition growth for a few years.
Such a view could be construed as negative, and given the group’s historic achievements that categorisation of the group has some truth in it.
It believes however the strong defensive qualities in the Kerry operations where food ingredients accounts for up to 70-80% of total profits.
In the past this sector has been the huge factor in the group’s impressive earnings growth and the global market for ingredients is expanding all the time.
Kerry recognises that by making strategic moves in Asia Pacific areas and China in particular where the population of 1.3 billion holds out huge sales potential in the years ahead.
That evolution will be slow, but it does give the group a defensive spine that will ensure it delivers steady growth well into the future.
