Business Irish

Saturday 10 December 2016

Kerry's €1bn spending spree set to continue

Published 24/02/2016 | 02:30

Stan McCarthy, CEO of the Kerry Group
Stan McCarthy, CEO of the Kerry Group

Kerry Group is this year prepared to exceed the near €1bn it spent on acquisitions in 2015.

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The company is actively exploring deals at the moment, chief executive Stan McCarthy told reporters yesterday.

"In terms of M&A activity, we have active M&A going on right now.

"If it was based on right now, it probably would not exceed last year's level (of spending), but things happen and things change during the course of the year, and were something significant to present itself I think we're very well ready to take advantage of that and be able to execute it," Mr McCarthy said.

Kerry shares closed up 4.5pc in Dublin yesterday after the company announced a 10pc increase in trading profit in its 2015 financial year - to €700m.

Group revenue was up 6.1pc to €6.1bn. "The level of change that is taking place in the market is unprecedented in terms of an increased emphasis on nutrition, health and wellness.

"Consumers are paying attention to labels, the origin of food, and then millennials are driving various trends in the market like snacking on the go.

"I think we're only just beginning to see the impact of ecommerce as it continues to evolve and grow...I think we're very well positioned for this fast-changing environment.

Three-quarters of revenue comes from its 'taste and nutrition' business, whereby it provides high-tech ingredients to manufacturers seeking to adapt to market trends.

The rest comes from its consumer foods business, which includes brands like Cheestrings, Charleville cheese, and Denny. McCarthy said the company had seen consumer confidence growing in both Ireland and the UK in relation to that business.

"This was a very good set of numbers from Kerry Group, a little ahead of our expectations," Davy analyst Jack Gorman said.

Merrion Stockbrokers' Darren McKinley said the company was 'best in class'.

"They are perfectly positioned within the structurally growing 'health' and 'wellness' industry and continue to add some of the biggest food companies in the world as customers.

"Having completed 10 acquisitions in the year at a cost of €888m, expectations are that these acquisitions leave the company well placed to deliver further earnings growth in the short-medium term," he said.

The company is guiding 6pc-10pc growth in adjusted earnings per share in 2016, taking into account a 3pc currency headwind at yesterday's exchange rates, Mr McCarthy said. He said he didn't think Brexit would have a significant impact on the business.

Irish Independent

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