Kerry hikes dividend by 14pc after €162m first-half profit
Published 01/09/2010 | 05:00
FOOD processing giant Kerry Group said yesterday that it would increase its dividend and raise its forecast for the rest of 2010 after strong half-year results.
Chief executive Stan McCarthy said the company would increase its interim dividend by 14.3pc to 8.8c per share and expected to achieve "mid-teen growth" in adjusted earnings per share this year, despite a difficult trading environment.
"We recognise that we had a tough first quarter in 2009 but issued solid guidance then and stuck with it. We may have been a little distracted by the Breeo acquisition last year but we have successfully repositioned the business and are well placed for future growth," he said.
Mr McCarthy was speaking after Kerry posted a 40pc increase in profit before tax to €162m for the first half (H1) of the year. That compared to €115m a year ago. Revenue was up 6.7pc to €2.4bn, while adjusted earnings per share were up 19.3pc to 80.2c
As expected, the ingredients and flavours business drove the company's growth. Revenue in that sector was up 3.9pc to €1.8bn but trading profit increased 9.3pc to €164m. Kerry said they recorded "excellent" results in Asia, increasing revenue by 11.8pc while revenue grew in the US and EMEA (Europe, Middle East and Africa) regions by between 2 and 3pc.
Revenue from the consumer foods business was almost flat at €885m but trading profit increased 4.4pc to €63m after what the company described as "strong sales growth by its leading UK brands and increased brand investment in Ireland".
Mr McCarthy added that while there were still problems in Ireland, the market was beginning to settle.
"We've come through a difficult period here but we are beginning to see a stabilisation in the Irish consumer market. Over the last 90 days we've seen very good stability. Cross-border traffic has reduced substantially. Obviously the country has been through a rough period but we haven't lost the faith of US and other multinationals to do business here," he said.
Kerry's chief also said the company was looking closely at a number of small- and medium-sized acquisitions in the near term.
"We have plenty of headroom for making deals in the short term. I know there's been a perception in the past that Kerry are always looking for 'the next big deal' but that may not be the case. I would expect the second half of the year to be significantly busier than the first."
The results were welcomed by analysts, with upgrades like to follow. "It is hard not to be impressed by their first-half performance. It shows how robust their strategy and model are. The guidance looks very achievable," said John O'Reilly of Davy Stockbrokers. Davy maintained its "outperform" rating on the company.
Liam Igoe of Goodbody Stockbrokers was also bullish on the stock, citing the consistency between Kerry's latest figures and their previous interim management statement along with the results of their peers.
"Kerry is now well on target to reach its goal of 10pc growth for the group. We upgraded our forecast EPS by 1.5pc ahead of the interims and we are now likely to further upgrade our EPS by 3pc," he said.
By late afternoon yesterday Kerry share price was up more than 5pc at €25.85.