Thursday 29 January 2015

Kerry amasses €250m war chest for acquisitions as profits soar

Shares in company hit record high as earnings rise more than 10pc in 2012

Published 27/02/2013 | 04:00

Kerry chief executive Stan McCarthy and chief financial officer Brian Mehigan announcing the global ingredients & flavours and consumer foods group’s 2012 results yesterday

KERRY Group will have a war chest of up to €250m to spend on acquisitions this year after the company racked up annual profits for 2012 that topped expectations.

Shares in the company hit their highest level on record yesterday as the firm said revenue rose more than 10pc and would climb by a similar margin this year.

In a statement, the food giant said earnings per share jumped 11.3pc to 237.6c on revenue of €5.8bn.

While trading profit gained 10pc, the Tralee-based firm reported a final profit of €267m. That was down 25pc year on year, due to restructuring costs and integrating acquisitions. The company booked an exceptional charge of €120.2m for these costs.

The full-year dividend rose 12pc to 35c a share.

Growth was driven by the ingredients and flavours side of the business, which saw trading profit increase 15pc on revenue that rose 14pc to €4.2bn.


Importantly, margins in that sector rose by 10 basis points.

In contrast, the consumer foods division, which is mainly focused on the UK and Ireland, saw flat profits, while margins on that side fell.

Company chief executive Stan McCarthy said the results were "strong" but highlighted the ongoing weakness in consumer markets in Europe.

"We continue to invest in technologies, innovation and nutritional expertise.

"Consumer confidence here and in the UK continues to lag the rest of the market and the consumer business remains challenged by the breadth and intensity of promotional activity and the difficulty in cost recovery fol- lowing significant raw material inflation," he said.

Mr McCarthy said the company had a "very active" pipeline of deals set for this year – he estimated that the group could spend as much as €250m on companies.

Kerry has not been involved in the horse-meat scandal so far, but in a sign of how far the collateral damage has travelled in the ready meals industry, Kerry's beef frozen meals have seen their sales drop by as much as a quarter.

On the same day that DCC became the latest company to leave the Irish Stock Exchange, Mr McCarthy reaffirmed his support for the Dublin bourse.

"We can see no reason why it would be in our interests to move listings," he said.

Looking ahead to 2013, Kerry is forecasting earnings per share to grow by between 7pc and 11pc.

Davy stockbrokers' John O'Reilly said the results "maintained the company's momentum of recent years".

"The key features were accelerating growth in continuing business volumes through the second half and the margin uplift in the ingredients and flavours division. The balance sheet also ended the year in good shape as underlying cash generation improved.

"The slightly better EPS out-turn for 2012 allows us to nudge up our underlying 2013 EPS forecasts modestly," he said.

Goodbody's Liam Igoe saw the results as "slightly better than expected" but warned he may "trim" his 2013 forecasts.

By the close in Dublin the shares were up 2.94pc at €42.40. They have gained 36pc in the last year.

Irish Independent

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