Wednesday 28 September 2016

Kerry Group could divert investment from Ireland to UK

John Mulligan and Sean Duffy

Published 05/08/2016 | 02:30

Brian Mehigan, chief financial officer, with Stan Mc Carthy, chief executive, with Kerry's results. Photo: Colm Mahady
Brian Mehigan, chief financial officer, with Stan Mc Carthy, chief executive, with Kerry's results. Photo: Colm Mahady

Kerry Group might divert some investment activity from Ireland to the UK following June's Brexit vote, chief executive Stan McCarthy has warned.

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He said a decision will depend on what trade agreements are ultimately engineered between the UK and the EU.

"There are some investments that we will have to reconsider - that we would have made here in Ireland that we may have to make in the UK, depending on how it looks with regards to trade agreements," Mr McCarthy said.

"In terms of the UK itself, it may provide us with an opportunity to manufacture and export out of there as well," he added.

While he said there's been no impact yet on Kerry's underlying business from the Brexit vote, the group has already suffered from the huge currency swings that resulted from the shock referendum decision.

Currency headwinds will see expected adjusted earnings per share growth at Kerry at the middle to lower end of a 6pc to 10pc range of 320 to 332 cent per share this year.

But analysts had by and large already pencilled in the currency impact from June's Brexit vote.

Kerry's group revenue in the first six months of 2016 was virtually unchanged at €3bn, while its trading profit rose 7.4pc to €321.6m.

The company owns household brands such as Dairygold, Denny and Cheesestrings.

Kerry also has a huge global taste and nutrition technologies business, and works with major chains such as McDonald's, Burger King, Subway and Starbucks.

The group said that the revenue figure reflected good volume growth that was offset by significant currency movements.

Kerry's business volumes rose 3.2pc in the period.

In Ireland and the UK, Kerry said that trading conditions in the consumer foods market remains "high competitive", as retailers adapt to a changing market landscape, and deflationary trends.

"Discounters have continued to gain market share which has continued to broaden retailer focus on 'everyday low price' strategies," it noted.

Kerry's business volumes in Ireland and the UK's consumer foods segment rose 2.3pc, but pricing fell 2.1pc.

Reported revenue declined 7pc to €697m in the region, with the drop fuelled by the disposal of non-core businesses and the adverse currency fluctuations.

Irish Independent

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