Kerry Group’s trading profit up 13% to €357m in first half of year

Kerry Group’s trading profit increased by 13 per cent to €357 million in the first half of the year as the company recovered from the impact of the Covid-19 pandemic in 2020, its interim results show.

The results, which were published on Friday, show the group trading profit margin increased by 70 basis points to 10 per cent, primarily due to the recovery of operating leverage given the impact of Covid-19 in the prior year.

It said revenue in the period increased by 4.9 per cent to €3.6 billion, reflecting a volume increase of 9 per cent.

There was also increased pricing of 0.5 per cent, an adverse transaction currency impact of 0.1 per cent, an adverse translation currency impact of 5.4 per cent, and contribution from acquisitions of 0.9 per cent.

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Constant currency adjusted earnings per share increased by 24.1 per cent to 152 cent. Basic earnings per share increased to 128.2 cent from 120.4 cent during the same period last year.

The interim dividend of 28.5 cent per share reflects an increase of 10 per cent from the prior year interim dividend. The group achieved free cash flow of €222 million, up from €107 million in 2020, representing cash conversion of 83 per cent in the period.

Intangible assets decreased by €243.3 million to €4.4 billion, while current assets increased by €632.2 million to €3.2 billion.

At June 30th, total net debt was €2 billion. This increase of €35.5 million relative to December 2020 reflected acquisition investment and dividends, partially offset by cash generated in the period.

The group’s balance sheet was described as being “in a strong position”, with sufficient headroom to support future growth plans.

During the period, the Group repaid $200 million of outstanding private placement notes. Following this repayment, the group now has no financial arrangements that carry financial covenants.

“We will continue to invest for growth and the enablement of our business model, while pursuing merger and acquisition opportunities aligned to our strategic growth priorities,” it said.

“While recognising the inherent uncertainty that will remain in many regions through the remainder of the year, the group expects to deliver strong volume growth.”

‘Strong growth’

Kerry Group chief executive Edmond Scanlon said there was progress to be seen across several markets

“We are pleased with overall performance in the period, reflecting continued strong growth in our retail channel, with good progression and momentum in foodservice while lapping lower prior year levels,” he said.

“The Americas had good overall volume growth, Europe delivered an excellent relative performance, while growth in Asia Pacific/Middle East/Africa remained strong despite challenging conditions in some local markets.

“A number of our end use markets had strong category development in the period, with beverage in particular achieving excellent growth.”

Mr Scanlon pointed to some “notable strategic developments” this year as the group continued to evolve its portfolio.

“We announced the acquisition of Niacet, which enhances our leadership position in the fast-growing food protection and preservation market, while we also reached agreement for the sale of our Consumer Foods’ Meats and Meals business,” he said.

“These transactions will further enhance Kerry’s position as a market-leading taste and nutrition company.

“Our performance through the period gives us continued confidence in our full year outlook, while recognising the inherent uncertainty that will remain in many regions through the remainder of the year.

“Our earnings guidance range has been updated as a result, and we have also reflected the expected impact from portfolio developments.”