Kerry Group shares slip as firm faces 'challenged' market

Traders work on the floor of the New York Stock Exchange. Photo: Reuters
Traders work on the floor of the New York Stock Exchange. Photo: Reuters

Michael Cogley

Shares in Kerry Group fell yesterday as the company reaffirmed its full-year guidance but admitted it was operating in a "challenged" market.

In a trading statement for the nine months to the end of September, the food giant said volumes climbed 3.2pc year on year but added that it continued to see issues in the likes of Europe and the US as well as elsewhere.

"Despite improving global economic conditions, consumer demand in developed markets remains weak," said the firm.

"Developing markets continue to be impacted by geopolitical issues and significant currency fluctuations," it added.

Still, the company has retained its guidance for the full year of earnings to grow by 6pc to 9pc.

A company spokesman said the numbers were a "continuation of a good ongoing trend we have in terms of volume growth in our taste and nutrition business and with good margin development across the business".

Kerry makes most of its money from its nutritions and food ingredients business these days, and that was reflected in the statement.

Overall, margins grew 40 basis points (bps) on the first nine months of last year but margins growth in the consumer foods was only half that at 20bps. Prices fell 2.4pc in the division, in part due to lower raw material costs.

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The company's net debt rose by €100m when compared to the half-year level.

However, the group claims that the increase is as a result of acquisitions "offset by cash generated by the business".

"In terms of our consumer food segment we have repositioned our consumer foods portfolio over the past two years and in terms of today's marketplace, even though it remains challenging, the repositioned Kerry Foods segment is performing very well," the company said.

Meanwhile acquisitions in the group are performing as expected. Kerry spent €735m (€804m) last summer.

KFI Savory, the US-based savoury flavour business of Kraft Food Ingredients acquired in June, performed "in line with expectations".

Analysts were mixed on the numbers. Cantor Fitzgerald's Stephen Hall said the statement "marginally missed management's targets".

Davy's Jack Gorman said: "At first glance, we are unlikely to change our forecasts materially."

By the close in Dublin, shares in Kerry had fallen 1.2pc to €71.83. The shares are up 34pc in the past year.

Irish Independent

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