Upbeat Kerry puts in a 'very decent' first half

Kerry Group has posted solid results for the first half and has said it anticipates meeting market expectations for the full year.

The firm saw operating profit before goodwill and exceptionals climb by 4.1 per cent to €133 million over the first six months against a backdrop of unhelpful currency movements in its major markets.

When currency fluctuations were stripped out, operating profit rose by 9.3 per cent.

Turnover was held steady at €1.8 billion despite negative translation effects, with like-for-like sales growth rising from 5 per cent last year to 5.9 per cent in the first half.

Adjusted earnings per share were 10.3 per cent higher at 46.1 cents.

Kerry managing director Mr Hugh Friel was "very pleased with the result", defining the first six months as the most difficult period seen by the company for more than 10 years.

He said the group was confident of a "good out-turn for the full year in line with market forecasts".

The company spent €125 million on three US acquisitions in the first half, and Mr Friel identified a "busy pipeline" of further purchases, particularly in ingredients and flavours in the US.

"We have a lot of capacity to fund acquisitions from debt," he said, emphasising that small and medium purchases were more probable than major deals.

Kerry has spent €1.2 billion on acquisitions over the past three years and is a leading global player in ingredients and flavours.

Analysts welcomed the interim numbers, which came in towards the top end of forecasts, particularly within Kerry's Asian business, which recorded operating profit of €5.4 million, up 34.8 per cent on a constant currency basis.

Like-for-like growth dropped back to 3 per cent in the Americas partly due to the cost of expansion in the region, while profits grew by 15 per cent and 10.9 per cent in the Republic and the rest of Europe respectively.

Goodbody analyst Mr Liam Igoe said Kerry's first-half performance had been "very decent", particularly when placed against currency pressures and a sluggish market background.

Mr Igoe is confident that Kerry will meet his full year targets, noting that risks to this are on the upside.

Ms Niamh Brodie of Merrion Stockbrokers said she would look at upgrading her forecasts slightly, highlighting progress on margins as a particular bonus in the numbers.

The company increased its operating margin from 7.1 to 7.4 per cent before goodwill and exceptionals.

Pre-tax profits were 52 per cent higher at €87.2 million, but the result would have been more or less flat in the absence of an exceptional charge taken last year.

The company will award an interim dividend of 4.05 cents, up 11 per cent on last year.

Kerry's shares closed 10 cents lower at €14.50 last night as the stock gave up gains recorded in the run-up to the interim numbers.