Saturday 21 July 2018

Kerry chief in earnings pledge as it buys US firm

Kerry Group CEO Ed Scanlon
Kerry Group CEO Ed Scanlon
John Mulligan

John Mulligan

Kerry Group has raised its medium-term growth targets and confirmed that it has acquired US-based probiotics firm Ganeden.

Kerry CEO Ed Scanlon told investors that the group plans to deliver in excess of 10pc growth a year in adjusted earnings per share over the next five years.

"This will be delivered through achievement of above industry-average volume growth and continued business margin expansion," he said.

"We expect to achieve 3pc to 5pc volume growth annually on a group-wide basis, with taste and nutrition targeting 4pc to 6pc growth, and consumer foods targeting 2pc to 3pc growth."

Mr Scanlon also told investors that trading profit margin in the taste and nutrition unit is targeted to grow by 40 basis points a year. The margin in the consumer foods division is expected to expand by 20 basis points a year. Those performances will contribute to an annual improvement of 30 basis points in the overall group margin in the next five years, according to Kerry.

"Kerry Group has a unique scalable business model which I am confident can deliver the continued organic growth of the business across developed and developing markets as planned," added Mr Scanlon.

"We are in a strong position to lead the continued consolidation of our industry benefiting from the group's strong balance sheet, scalable business model and geographic footprint."

Kerry's taste and nutrition unit is the group's biggest, accounting for 79pc of the company's €6.1bn revenue last year, and 86pc of its €750m trading profit.

The company has 130 manufacturing locations around the world, as well as regional development centres in countries such as India, Singapore, China and Brazil.

It has two global technology and innovation centres - one in Ireland and the other in the US.

Mr Scanlon also told investors that Kerry is continuing to target a return on average capital employed of more than 12pc per annum.

The CEO, who succeeded Stan McCarthy in the role earlier this year, also confirmed the acquisition of Ohio-based Ganeden, which it described as a leading innovation company focused on patented probiotics and related technologies.

Among its products is a cosmetic application called Bonicel, a personal care product designed to help reduce the appearance of wrinkles and roughness.

The company has more than 135 patents for probiotics across a range of applications in animal health, food, and beverages, as well as personal care. Ganeden will generate sales of about $25m this year.

Kerry said that Ganeden's technology will be extended into wider applications across the group's global developed and developing markets.

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