Solid First Half Performance by Kerry Group
Kerry Group, the global ingredients, flavours and consumer foods business, has reported a 3% increase in first half trading profit to €275 million, reflecting 7.1% like-for-like growth, on revenue down 1.9% to €2.9 billion, impacted by the adverse currency factors.
Business efficiency enhancements through the group’s 1 Kerry Business Transformation Programme and improved product mix contributed a 50 basis points increase in the group trading profit margin to 9.5%. This reflects a 60 basis points improvement in trading margin in Kerry’s ingredients & flavours business to 11.7% and 10 basis points improvement in Kerry’s consumer foods margin to 7.8%.
Kerry’s Ingredients & Flavours division increased trading profits by 4.9% to €251 million on sales of €2.1 billion with underlying sales growth of 4.7%. In a comparatively weak overall marketplace, Kerry’s taste & nutrition platforms outperformed market growth rates in all regions. Functional ingredients & actives recorded strong growth in particular in nutrition sectors. Growth continued to accelerate in developing markets despite the economic impacts of significant negative currency movements.
Kerry Foods, which produces added-value branded and customer branded chilled foods primarily to the UK and Irish consumer foods markets, reported revenue of €801 million, reflecting 0.9% lower underlying sales. Continuing business volumes (primarily due to reduced engagement in promotional activity) declined by 1.2% and net pricing increased by 0.2%. Trading profit decreased by 2.4% to €62 million.
Increased fragmentation of food retailing coupled with prioritised spend and drive for value by consumers in the Irish and UK markets continued to impact performance in Kerry Foods’ chilled foods categories. However, the division has continued to improve efficiencies through advanced lean programmes. Kerry Foods’ focus brands continue to perform well, particularly in the UK market.
Stan McCarthy, chief executive of Kerry group, comments: “We are pleased to report a solid group-wide performance in H1 2014 with good underlying sales growth and margin improvement. Notwithstanding significant adverse currency movements, adjusted earnings per share increased by 5.8% to 115.2 cent. Our Kerry Global Technology & Innovation Centres continue to drive industry-leading innovation. We remain confident of delivering 6% to 10% growth in adjusted earnings per share in 2014 as previously guided.”
