Kerry investors sit back comfortably as Smurfit's stay on edge of their seats

Kerry Group's record of impressive earnings growth is expected to be maintained when the group reports half-year results this week, with analysts pencilling in profit forecasts between €70 million (£55 million) and €73 million and earnings per share around 35 cents.

The strength of Kerry's performance - down largely to growth in its international food ingredients business - is reflected in the movement of the group's share price, which has risen from €11.50 to its current level of €14.60, making the share one of the best-performing this year on the Irish market.

That performance means that Kerry is one of the few major industrial shares that has actually outperformed the Irish market and has left the Irish group at a premium to most of its peers in the international food ingredients industry.

But while many in the market will inevitably focus on the half-year results, there will be greater interest in what chief executive Mr Denis Brosnan has to say about acquisitions. Although Mr Brosnan said earlier this year that acquisitions in the current year are likely to be small - less than $100 million (€111 million) - Kerry had been linked with a number of companies which may be put up for sale.

Given Kerry's size and financial firepower, analysts believe that the group will be involved in any ingredients disposal that comes on the market which will add new products, new technology or new markets.

Kerry has been linked with three possible major acquisitions in the past few months. These include the US ingredients manufacturer, Universal Foods, which is currently worth just under $1 billion, and whose speciality ingredients business would fit snugly with Kerry's US business.

More recently, Kerry has been tipped as a possible bidder for Bush Boake Allen, the US manufacturer of flavours and fragrances that may be sold off by controlling shareholder, International Paper. Bush Boake Allen is worth about $800 million although Kerry could sell off the fragrances business if a bid were successful.

Jefferson Smurfit, however, is in a different situation, with its shares badly under-performing the market this year.

Smurfit is expected to announce strong results for the six months to end June. At Friday's €2.21 close, Smurfit shares are above their low for the year to date of €1.74 but well below their high of the year of €3.22, reached in January. While the shares have shown some improvement in recent weeks on the back of improved product prices and signs that the industry is maintaining discipline on production, they have underperformed the market by 33 per cent in the year to date.

Analysts are forecasting first half pre-tax profits of €170E190 million and earnings per share of between 8.5 and 9.7 cents. This would compare with last year's first half profit before tax and exceptional charges of €33 million and earnings per share of one cent. The group reported a 20 per cent drop in profits before tax and exceptional charges for its last full year at €167 million euros. The latest results will be boosted by rises in linerboard and corrugated paper prices in the US market. Prices have risen by about $50 per tonne since the beginning of the year.

Analysts will be looking to the company for indications that the recovery in prices is continuing into the current half. "We'll be looking for outlooks from Smurfit on its markets across the board. But, broadly speaking, the industry is showing a discipline it hasn't shown before and better times should be on the cards," according to Davy Stockbrokers, which is broker to the company. Analyst Mr Joe Burnell said the industry believed conditions would pick up in the second half and most observers were tipping a linerboard price rise next year.

Smurfit analyst at Goodbody Stockbrokers Mr Liam Igoe, who is recommending Smurfit as a buy, said that the paper and packaging sector was out of favour and would possibly need a "season of reasonable numbers" to bounce back.