Kerry Group’s first-half revenue rises to €2.9bn
Profit after tax increases by 12.2% at food giant despite ‘sluggish’ market conditions
Brian Mehigan (left) Chief Finance Officer, and Stan McCarthy, Chief Executive, at the presentation of interim results for the Kerry Group, in Dublin yesterday. Photograph: Eric Luke
Global sales revenue at Kerry Group climbed to €2.9 billion in the first half of the year despite “sluggish” market conditions, with profit after tax topping €117 million.
The food giant yesterday reaffirmed its outlook of achieving 7 to 11 per cent growth in adjusted earnings per share, saying it remained “confident of achieving growth targets for the full year”.
Overall revenue at the company increased 1.1 per cent to €2.9 billion with growth in continuing business volumes and pricing offsetting cost input inflation of 4 per cent.
Profit after tax rose 12.2 per cent to €117 million for the six months to the end of June, up from €104.6 million in 2012, while the group’s trading margin increased by 9 per cent or 70 basis points.
Revenue in the ingredients and flavours business rose 4.1 per cent to €2.15 billion, while trading profit grew by 11.6 per cent to €239 million.
Kerry said it had made further progress in extending its market and technology positioning in the Asia-Pacific region. Ingredients and flavours revenue in the region rose by 15.4 per cent to €394 million, with continuing business volumes up 8.8 per cent.
The company, which employs more than 23,000 people in 25 countries, earns about 72 per cent of its revenue from its ingredients and flavours business and about one-third from its consumer foods division.
Trading profit slipped by 1.8 per cent to €64 million in the consumer foods division, while revenue fell by 5.8 per cent to €830 million, as economic and fiscal pressures continued to affect consumer confidence in the Irish and British markets.
While Kerry food products were unaffected by the horse meat scandal during the first quarter of the year, the company said confidence in some meat categories, including the frozen meals sector, was affected. This resulted in lower sales due to the underlying weakness of the market.
Kerry chief executive Stan McCarthy said results across the company’s core ingredients and flavours and consumer foods business segments were “very encouraging” given the relatively sluggish overall environment, particularly in developed markets. He said the group had not been without its challenges, with the drought in the US and wet weather in Europe, and a sluggish GDP environment.
“Perhaps we are the culprits ourselves in making it challenging as we are going through quite a transformation process in Europe,” he added.
He said the transformation and consolidation of the group, which is costing €240 million and will see the development of a new technology and innovation centre in Co Kildare, had put the business “under quite a bit of stress”.
In comparison with the same period last year, free cash flow for the firm increased from €84 million to €216 million.
The company reported an 11.1 per cent increase in its dividend per share to 12 cent, while adjusted earnings per share rose by 11.7 per cent to 108.9 cent in the period.