Kerry Group expecting earnings per share to rise by 10pc
Published 30/06/2011 | 05:00
KERRY Group said yesterday it expects annual earnings per share (EPS) to grow by more than 10pc per year over the next five years and said it is on target to meet this year's guidance after the company updated its long-term growth targets.
At an investors' day in London, chief executive Stan McCarthy said he was projecting EPS growth "in excess of 10pc" while like-for-like volume will grow by 3pc to 5pc per annum.
The EPS growth will be achieved through higher than market average volume growth and improved margins, Mr McCarthy said.
The group's "1 Kerry" and "Kerry Connect" programmes, which are designed to improve efficiencies across the business, will also contribute to growth.
Kerry recorded annual EPS of 195c last year. It is forecasting that to grow to between 210c and 218c in 2011.
"We expect to achieve like-for-like volume growth of 3pc to 5pc per annum on a group-wide basis, with our ingredients and flavours businesses targeting 4pc to 6pc LFL growth and Kerry Foods, the group's consumer foods business, targeting 2pc to 3pc LFL growth," Mr McCarthy added.
Margins at the ingredients and flavours business are expected to grow by 50bps per annum -- more than double the consumer foods division which is targeting a 20bps improvement.
Combined, those margins will contribute a 30bps group margin improvement per annum on average across the five-year cycle, Kerry said.
The company expects a further 100bps improvement to be achieved on completion of the "Kerry Connect" business enablement programme.
"Our capital spend will increase to support the group's planned growth over the five-year cycle and expenditure on the Kerry Connect programme will be approximately €350m," said Mr McCarthy.
"Notwithstanding this increased investment in group systems and infrastructure, our financial return target ratios remain above 15pc for return on average equity and above 12pc for cash flow return on investment."
Kerry Group closed up half a percent at €28.15.