Kerry Group records strong financial growth as CEO announces retirement
Revenues at Kerry Group increased slightly to €6.1bn in 2016, according to preliminary results released by the company this morning.
The Group has also announced that Stan McCarthy, who became Chief Executive of the Group in January 2008, will retire as Chief Executive on September 30, 2017 and as a Director of the Group at year-end.
Speaking to RTE Radio One's Morning Ireland, McCarthy said the business is currently working on the next five-year plan to commence in 2018 and that now was 'appropriate time for a change'.
"Obviously nationalism and globalisation are getting increasingly noisy in all parts of the world. We're thinking how that might impact Kerry and the economies around the world, and certainly Brexit as well. The future of the EU could also be a concern," he said.
McCarthy said Kerry Group will always be a 'great company'. "It's in fantastic shape. We will continue to move forward and to navigate through the uncertainty I just highlighted".
"We're very well placed to deal with today's consumer and market dynamics that are changing," he said.
Edmond Scanlon has been appointed Chief Executive Designate to succeed McCarthy on his retirement. Scanlon is currently President and CEO Kerry Asia Pacific. McCarthy said Scanlon was the 'right guy' to bring the organisation through to the next stage.
Scanlon joined Kerry’s Graduate Development Programme in 1996 and worked in Finance until his appointment as Vice President Finance, Supply Chain and Operations of Kerry’s Global Flavours Division in 2004.
In 2007, he was appointed Vice President Mergers & Acquisitions, Kerry Americas region, before being appointed Global President Kerry Functional Ingredients & Actives in late 2008. In 2012, he was appointed President of Kerry China, prior to his appointment as President & CEO Kerry Asia Pacific region in November 2013.
The Board thanked McCarthy for what it called his 'outstanding leadership' as Chief Executive and for his career-long contribution to the growth of the organisation since 1976.
Read more: New man at the helm of €13bn Kerry Group
Kerry Group revenue on a reported basis increased slightly in 2016 to €6.1bn. It says this reflects good volume growth offset by significant adverse currency movements and lower pricing.
Revenue in Its Taste & Nutrition business recorded growth of 4pc to €4.9bn while in its Consumer Foods arm revenues grew 2.1pc to €1.3bn.
Trading profit at Kerry Group increased by 7.1pc to €750m.
Business volumes grew satisfactorily during the year reflecting 3.6pc growth year-on-year, good growth in North America, an improved performance in Latin American markets, challenging market conditions in the EMEA region (due to the prevailing deflationary environment and instability in regional developing markets) and a strong business performance throughout Asia.
Net pricing was 2.1pc lower against a background of approximately 4pc lower raw material costs.
- Adjusted EPS* up 7.1pc to 323.4 cent
- Group revenue of €6.1 billion reflecting 3.6pc business volume growth
- Taste & Nutrition €4.9 billion, +4pc volume growth
- Consumer Foods €1.3 billion, +2.1pc volume growth
- Trading profit increased by 7.1pc to €750m
- Group trading margin up 70 basis points to 12.2pc
- Taste & Nutrition +60bps to 14.7pc
- Consumer Foods +30bps to 8.8pc
- Final dividend per share of 39.2 cent (total 2016 dividend up 12pc to 56 cent)
- Record free cash flow of €570m (2015: €453m)
- Industry-leading RD&A investment
Currency headwinds relative to 2015 contributed an adverse 4.1pc translation impact and an adverse 0.3pc transaction currency impact relative to revenue.
Taste & Nutrition achieved 4pc growth in business volumes and pricing was 2.1pc lower.
Kerry Foods’ business volumes increased by 2.1pc and pricing reduced by 2pc.
The Group trading margin increased by 70 basis points to 12.2pc. This reflects a 60 basis points improvement in trading margin in Taste & Nutrition, a 30 basis points improvement in Kerry Foods’ margin and reduced spending on the Kerryconnect programme.
Basic earnings per share increased by 1.4pc to 302.9 cent. Adjusted earnings per share increased by 7.1pc to 323.4 cent (2015: 301.9 cent).
The Board of Kerry Group is recommending a final dividend of 39.2 cent per share, an increase of 12pc on the final 2015 dividend.
Together with the interim dividend of 16.8 cent per share, this brings the total dividend for the year to 56 cent, an increase of 12pc on 2015.
Expenditure on research and development increased significantly due to increased investment in Taste & Nutrition to €261m (2015: €234m). Net capital expenditure amounted to €210m (2015: €229m). The Group achieved a record free cash flow of €570m (2015: €453m).
Commenting on the results Kerry Group Chief Executive Stan McCarthy said "in 2016 Kerry delivered good volume growth and a strong financial performance including sustained business margin expansion, record free cash generation and 7.1pc growth in adjusted earnings per share".
"The Group remains confident of its ability to sustain profitable growth throughout global markets. In 2017 we expect to achieve good revenue growth and 5pc to 9pc growth in adjusted earnings per share,” he said.
For Stories Like This and More
Download the Free Farming Independent App