Kerry Group revenue rises 3% in ‘challenging’ start to year

Revenue at global food ingredients group Kerry rose 3.2 per cent to €3 billion in a “challenging” first half of the year, as the group reaffirmed its full-year outlook and said the long-term implications of Brexit were not yet clear.

In the six months to June 30th, trading profit rose 7.4 per cent to €322 million, while the group trading margin was up 70 basis points to 10.6 per cent.

Adjusted earnings per share increased by 7.5 per cent to 133.8 cent,while Kerry said it would pay an interim dividend of 16.8 cent per share, up by 12 per cent.

Kerry reaffirmed its full-year guidance for growth in adjusted earnings per share for 2016 to be towards the middle to lower end of the 6 per cent to 10 per cent range of 320 to 332 cent per share.

Margin expansion

Kerry Group chief executive Stan McCarthy pointed to a "challenging market landscape", but said that the group nonetheless delivered a solid financial performance in the first half of 2016, with continued margin expansion, strong cash generation and a 7.5 per cent increase in adjusted earnings per share.

“While we are confident of delivering an underlying trading performance in the full year as previously guided; taking into account the increased currency headwinds of 5 per cent at current exchange rates, growth in adjusted earnings per share in 2016 is expected to be towards the middle to lower end of the 6 per cent to 10 per cent range of 320 to 332 cent per share,” he said.

Business volumes grew by 3.2 per cent in the period, “reflecting a strong performance in American markets; lower volume growth in the EMEA region, in particular in regional developing markets; and strong business growth momentum in Asia,” Kerry said.

On Brexit, Kerry said that while it was too early to quantify the longer-term implications, “consumer confidence has weakened as a result of this uncertainty but Kerry remains confident that our business is well positioned to address the challenges and opportunities that this decision may present”.

In a note, Davy analyst Jack Gorman said the results were in line with expectations, adding that Kerry’s record of consistent growth with low volatility looked set to continue this year.

“The better-than-expected trends in trading margin and operating cash flow are likely to be well received,” he said.