Kerry Group reports good results

Kerry Group has reported good first-half results, boosted by last year's acquisition of Golden Vale and a continued strong performance from its US ingredients operations.

The food group announced a 12 per cent increase in the interim dividend to 3.65 cents and said it was confident its full-year performance would meet expectations.

"Our food ingredients, flavours, consumer foods and food service operations continue to grow and develop in line with group projections and we expect a good out-turn for the full year," managing director Mr Hugh Friel said.

Kerry said the reorganisation and integration of businesses acquired last year, including Golden Vale, was progressing "very well". The company, which made seven acquisitions in the first half and 21 over the past 18 months, remains on the lookout for further opportunities. But a spokesman said that while there were more small to medium-sized acquisitions in the pipeline, there were no large-scale transactions "on the horizon at the moment".

Despite difficult conditions in some sectors, the company posted a 19 per cent increase in first-half operating profits to €128 million. Sales increased by 34 per cent to €1.8 billion and rose by 5 per cent on a like-for-like basis.

Pre-tax profits slipped by 26 per cent to €57.3 million but this reflected a €25.5 million charge related to its €52 million integration and rationalisation programme. Kerry said the programme would be substantially completed by year-end and would have a positive impact on earnings.

However, the programme, combined with the lower margin elements of Golden Vale's business, caused group operating margins to slip in the first half to 7.1 per cent from 8.1 per cent a year earlier.

Helped by the €245 million acquisition of Golden Vale, sales from Kerry's Irish operations almost doubled to €627 million, while operating profit rose by 42 per cent to €26.9 million. Kerry's European businesses contributed operating profits of €43.9 million, a 9 per cent increase, as the company recorded "excellent progress" in its ingredients markets. Operating profits in the Americas, which includes the US, Canada and Latin America, rose by 18 per cent to €52.8 million, while Kerry's Asia Pacific operations contributed €4.4 million to profits, an increase of 13 per cent.

Analysts said the robust set of results were in line with expectations. "There were no great surprises," said Mr Liam Igoe, analyst at Goodbody Stockbrokers.

He noted while Kerry's operations in the Republic were a little weaker than expected, the American operations remained a strong driver of growth. Shares in the company closed 46 cents lower at €14.90 in a weak overall market.