Profits climb almost 70 per cent at Kerry Group

Food and ingredients company says Irish brands faced intense competition discounter offerings

Kerry group chief executive  Stan McCarthy said adjusted earnings per share increased by 5.8 per cent to 115.2 cent. Photo: Alan Betson/The Irish Times

Kerry group chief executive Stan McCarthy said adjusted earnings per share increased by 5.8 per cent to 115.2 cent. Photo: Alan Betson/The Irish Times

 

Kerry Group has reported a profit after tax of €194.7 million for the first six months of 2014, representing a 65.8 per cent increase on the same period last year.

However, global sales revenue at €2.9 billion was unchanged from the first half of last year.

The food and ingredients company said trading profit increased by 3 per cent on a reported basis to €275 million reflecting 7.1 per cent like-for-like growth.

In the Americas, Kerry posted revenue of €915 million reflecting underlying sales growth of 4.7 per cent. Continuing business volumes in the Americas grew by 4.3 per cent and pricing increased by 0.6 per cent.

While Kerry continued to successfully expand its footprint in EMEA developing markets, trading proved more challenging due to currency related inflationary pressures and political unrest in some zones. Reported revenues at €791 million reflect underlying sales growth of 1.3 per cent.

Kerry said the construction of the its Global Technology & Innovation Centre in Co Kildare to serve EMEA customers is well advanced and on schedule to be operational in early 2015.

Kerry Group chief executive Stan McCarthy said adjusted earnings per share increased by 5.8 per cent to 115.2 cent, despite significant adverse currency movements. Adjusted earnings after tax increased by 5.9 per cent to €203 million. Basic earnings per share increased from 66.8 cent to 110.8 cent.

“We remain confident of delivering 6 per cent to 10 per cent growth in adjusted earnings per share in 2014 as previously guided,” Mr McCarthy added.

Davy stockbrokers said the group continues to operate with “high levels of financial flexibility”. Davy analyst Jack Gorman said a challenging UK and Irish food retailing environment weighed on the first half performance for Consumer Foods.

First-half revenues in that division fell 3.5 per cent year-on-year to €801 million, while trading profits fell 2.4 per cent to €62.3 million.

Kerry said its Irish brands faced intense competition from heavily promoted discounter and private label offerings. Performance in Kerry Foods’ branded sausage and cooked meats segments was impacted as a result.

Since the period-end, Kerry Foods introduced a novel children’s snack offering Yollies yoghurt lolly range. Yollies has already achieved leading retailer listings in Ireland with a planned launch in the UK market later in the year.

At the end of June, net debt stood at €1.1 billion an increase of €27 million relative to the December2013 position. The net deficit for all defined benefit schemes (after deferred tax) was €277 million.

The group said it has a strong product development pipeline in developing markets – in particular in nutritional segments.

The board has declared an interim dividend of 13.5 cent per share, an increase of 12.5 per cent on the 2013 interim dividend of 12 cent.