Buoyant Kerry posts sparkling results as investors rewarded
Published 22/02/2012 | 05:00
Firm's full-year dividend for 2011 expected to rise by almost 12pc
KERRY Group shareholders received a boost yesterday after the food giant increased its full-year dividend, following a year that saw profits surge.
The Tralee-based company will pay a dividend of 22.4c per share for the second half of 2011, bringing the full-year dividend to 32.2c. That's almost 12pc year higher than last year.
The dividend boost came as Kerry reported pre-tax profits for 2011 of €449.1m, up nearly 11pc on 2010 and ahead of market forecasts. Revenue, at €5.3bn, was 6.4pc better than the previous year. For 2012, the firm is forecasting adjusted EPS of between 228c and 235c. The company posted EPS of 213.4c in 2011.
Chief executive Stan McCarthy said he expected the company to be less involved in merger and acquisition activity in the year ahead and concentrate instead on bedding down deals it had completed during 2010.
Kerry spent €380m on nine different purchases, mostly during the last quarter of the year, but expects that figure to be closer to €250m in 2012.
"Acquisitions don't always happen when you want them but you have to take them when they're the right thing to do," he said.
"We have the capability to do deals if they come up (but) we have to integrate the acquisitions we made last year first, and do that quickly.
"There will be some acquisitions in 2012, but I don't think it will be the same level of activity as last year," Mr McCarthy added.
The vast majority of Kerry's profits came from the ingredients and flavours arm of the business, where trading profit surged nearly 10pc to €439m. Margins at the unit rose 10 basis points to 11.9pc. China, one of Kerry's fastest growing markets, is expected to post "double-digit growth" this year.
In contrast, the consumer foods sector continued to struggle, with trading profit only increasing 1pc to €130m. Margins fell 30 basis points to 7.8pc.
Mr McCarthy acknowledged the pressure that side of the business was under, particularly from aggressive pricing by retailers in order to stimulate demand.
"I think we're reaching some sort of inflection point because the string can only take so much. We may be at that bottom point where there has been a lot of discounting and a lot of price cutting all in the context of rising input costs so that is a pretty challenging environment.
"I'm hopeful we're near the end of that but it is a challenging environment and we have to make sure we're sufficiently well positioned for when the market turns."
NCB analyst Darren Greenfield said the Kerry results were very encouraging.
"In contrast to some competitors it has managed to pass on significant raw material cost increases without a significant impact to margins," he said.
Kerry finished Tuesday down 0.96pc at €30.80, only the fourth negative trading day out of the last 17 sessions in Dublin.
The firm said it had no plans to follow CRH and Greencore in switching its primary listing to the London Stock Exchange with Mr McCarthy labelling it a "non issue" for Kerry.