Kerry Group rises as interim results up

SHARES IN Kerry Group rose by 6 per cent yesterday, after the company increased its guidance for the year on the back of strong revenue and earnings per share growth during the first half of 2012.

Interim results for the six months to the end of June showed that revenue grew by 10 per cent during the period to €2.9 billion, reflecting like-for-like growth of 2.5 per cent, excluding acquisitions, disposals and currency translation.

Volume increased by 1 per cent, with the remaining revenue growth attributable to a mix of pricing and acquisitions.

Trading profit increased by 12.6 per cent to €241 million, helped by an improved performance in the second quarter, with the group’s overall trading margin up 20 basis points to 8.3 per cent.

The company is now forecasting earnings per share growth of between 8 and 12 per cent for the full year. Kerry’s ingredients and flavours division, which accounts for 70 per cent of revenue, experienced revenue growth of 14 per cent during the period, or 2.7 per cent on a like-for-like basis, with trading margins up 30 basis points.

Consumer foods experienced revenue growth of 1.8 per cent, and a 1.8 per cent increase in trading profit, though margins remained challenged, with group trading margin flat for the period.

Noting that the consumer foods market continued to be highly competitive and characterised by a demand for discounting and private label brands, Kerry Group chief executive Stan McCarthy said the division had performed well during the period, particularly in the UK, through brands such as Richmond sausages and cheese strings.

The pharmaceutical industry was a key strategic focus for the company, he said. Kerry currently manufactures ingredients for some of the world’s largest pharmaceutical companies, with pharmaceutical and functional ingredients representing 9 per cent of the company’s ingredients and flavours division’s revenue.

He said the company has plans to increase activity in this area, with the pharma business already experiencing double-digit growth.

During the period the company took a combined charge of just over €74 million, relating to acquisition integration costs. The company, which has 150 manufacturing sites across 25 countries, closed 10 sites within the group during the period.

McCarthy said the company’s 1 Kerry programme, which aims to streamline businesses within the group, was delivering results, though the company noted that the estimated charge for the programme over two years was approximately €200 million, mainly relating to integration and investment costs associated with recently acquired business.

Kerry Group closed up 6 per cent at €38.50 yesterday.