Profits at Kerry’s consumer foods dips, but nutrition division rises 7%

Weaker sterling hits Denny and Dairygold, leading to 8% decline for 2017

 Edmond Scanlon. “Kerry Group delivered strong top-line growth and sustained business development in 2017.” Photograph: Dara Mac Dónaill

Edmond Scanlon. “Kerry Group delivered strong top-line growth and sustained business development in 2017.” Photograph: Dara Mac Dónaill

 

Kerry Group said on Monday that trading profits in its consumer foods division, where brands include Dairygold, Denny and EasiSingles cheese slices, fell by 8.1 per cent to €108 million last year as it grappled with growing competition in the UK and Irish markets and the impact of weaker sterling.

However, trading profit in the larger globally-focused taste and nutrition business, which makes up more than 80 per cent of group sales, grew 7.1 per cent to €767 million, helped by double-digit revenue growth in the Asia Pacific region.

Adjusted earnings per share (EPS) rose 5.5 per cent to €3.412, in line with the group’s lowered guidance issued in August as a result of dollar weakness against the euro. The company, led by Edmond Scanlon, is forecasting 6 per cent to 10 per cent adjusted EPS growth this year.

Kerry Group also said that chief financial officer Brian Mehigan would move to the role of chief strategy officer from September, and would be replaced by Marguerite Larkin, currently a senior partner with Deloitte

“Kerry Group delivered strong top-line growth and sustained business development in 2017,” said Mr Scanlon.

Mr Scanlon, who succeeded long-standing chief executive Stan McCarthy in October, set out his stall late last year with a target of delivering more than 10 per cent adjusted earnings growth on average a year over the next five-year cycle.

Acquisitions trail

The group returned to the acquisitions trail in 2017, spending €397 million on sales, after spending 2016 integrating €900 million of deals carried out during the previous year.

Kerry Group has spent more than €4.5 billion on mainly small bolt-on-acquisitions since 2000, according to analysts, as it built up its taste and nutrition business. The company has consistently said that it has no plans to sell off its lower-margin, but cash generative, legacy consumer foods business.

Group sales grew 4.3 per cent last year to €6.4 billion, while the company announced a 12 per cent increase in its final dividend to 43.9 cent per share.