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Sunday 21 October 2018

Kerry increases its July milk price and considers bad weather payments to farmers

Kerry Group CEO Edmond Scanlon said it is ready to spend as much as €800m on acquisitions
Kerry Group CEO Edmond Scanlon said it is ready to spend as much as €800m on acquisitions
Margaret Donnelly

Margaret Donnelly

Kerry Group has announced a milk price rise of 1c/L (VAT inclusive) to its suppliers for July milk.

It comes the day after Kerry announced half year figures that showed revenue growth of 1.4pc year on year for the first half.

Kerry will pay milk suppliers 32c/L (VAT inclusive) for July milk it said today.

Kerry Group CEO Edmond Scanlon said he is considering a new support payment scheme for the company's milk suppliers, with many farmers suffering the consequences of this year's extreme weather.

Mr Scanlon told reporters in Dublin yesterday that such a scheme was "something we're going to have to look at".

"There's a package of thing we're looking at in terms of different types of support. We have to see how the next couple of months trade out, how the weather goes... but certainly we won't be found wanting as an organisation to help out our farmers." Around 14pc of the company is owned by the Kerry co-op.

He said he was more optimistic about the prospect of a milk price increase than he was in February. "Generally speaking we'd be fairly optimistic that the milk price would hold up. At the end of the day Kerry Group doesn't set the milk price, it's a market-driven event but we are doing everything we possibly can to drive the volatility out of it."

Kerry's growth in revenue reflected volume growth of 3.6pc and a 0.6pc improvement in pricing, as well as the contribution from acquisitions, according to interim results from the group.

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However the consumer foods business saw its trading margin decrease by 10 basis points to 10.5pc, as strong volume growth and contribution from acquisitions were offset by adverse currency movements.

On a constant currency basis, group sales increased by 8pc year-on-year.

Scanlon also said that the company could spend as much as €800m on acquisitions this year, and that its pipeline in this regard was as strong as he has ever seen.

"We very much see ourself as the consolidator in our space. We feel very good about where we are," Mr Scanlon said, adding that the acquisition plan would be largely focused on the company's taste and nutrition division. He said, however, that reaching close to €800m of spend would depend on the timing of deal closures.

That division - which provides ingredients to other firms - is by now substantially larger than its other division, which makes consumer foods like Denny and Cheestrings.

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