Plunge in milk price getting 'dangerous' - Kerry Group boss
Published 07/08/2015 | 02:30
THE milk market is getting "dangerous" for suppliers as prices continue to plunge, the head of Kerry Group warned yesterday.
Stan McCarthy said the collapse in prices has yet to feed through completely to suppliers but if the low prices continue through the end of this year then the problems will only get worse.
"It's getting extremely dangerous now and you are going to have some reaction on the demand side, and in the supply side we are heading to where it is becoming uneconomical to produce long term and that will have it correct itself.
"It's not sustainable. Near term it looks like a difficult environment for a producer or processor but longer term there is still growing demand for dairy products," he said.
Mr McCarthy was speaking as Kerry Group posted stronger than expected half-year profits and boosted its full-year guidance. The food giant saw profits after tax climb 22pc to €237.8m on revenue of more than €3bn.
The company increased its dividend by 11pc and said full year earnings per share will rise by 6pc to 9pc. The company has spent close to €250m on acquisitions so far this year and is likely to top €500m worth of deals by the end of 2015.
While trading profits in its consumer foods business slid by 3.9pc, that was more than offset by growth in its ingredients & flavours division, where profits rose 11pc and margins by 40 basis points. Mr McCarthy said future deals could be anywhere, but Kerry had the ability to roll them out across the rest of its business. Deals would involve its taste and technologies arm, he said.
Kerry shares rose 0.1pc.