Kerry interim profit up 21% to £20m

KERRY Group has reported a strong performance in the first half of 1996, with pre tax profits up 21 per cent to £20 million. Sales were up 9 per cent to £589 million.

The figures, issued yesterday, were ahead of market forecasts, with brokers predicting an out turn of around £19 million for the half year period.

The results were well received in the Dublin market yesterday, pushing the share price up 3p to 595p.

The figures show a strong performance across all of the group's businesses, particularly at its food ingredients and consumer food divisions.

However, they also show that the group's net debt remains high, standing at £372 million at the end of June. A company spokesman said it was now confident that debt would be reduced to £$2$ million by yeer end, in line with revised targets which reflect the acquisition of the Ciprial specialist food ingredients business in February for £54 million.

The group said the half year figures were "very satisfactory" as trading conditions had been difficult, particularly in Britain.

Kerry is focused on three sectors - ingredients, food and agribusiness - all of which reported good growth in the six months to the end of June last.

Its ingredients business, which accounts for 55 per cent of group turnover, showed increased operating profits of £29.4 million, up from £27.4 million in the first six months of 1995. Ingredients sales also ran strongly ahead, up from £299.9 million to £332.2 million.

Profit margins in the ingredients business were slightly lower than in the previous year, down from 9.1 per cent to 8.8 per cent. This was mainly due to higher raw material costs and the inclusion of the Ciprial fruit business in the figures.

Kerry Foods' operating profits in the branded goods business were up 15 per cent to £10 million, on sales of £226.8 million. The group also managed to secure improved margins in this area - rising to 4.4 per cent from 4.4 per cent in the previous year.

Kerry says the BSE scare did affect sales in some areas of this business in the early part of the year. But it said good growth in its branded product sales in the second quarter had helped to improve the profitability of this business.

Its agri business division recorded profits of £900,000 one increased sales of £30.4 million.

The group stressed yesterday that it was on target to complete the integration of its US ingredients company, DCA, this year. And, with the addition of Ciprial, it said it was now focusing on maximising the potential of the combined Ciprial/Margetts fruit, ingredients businesses across Europe.

The results include four months trading from Ciprial. The group also completed the acquisition of the remaining equity in the Solutach DCA joint venture in Australia in March. These acquisition were funded through borrowings.

Earnings per share increased from 12.2p to 14.2p before good will write offs. Shareholders area to be paid an interim dividend of £1.26 before tax in November.