Sunday 21 July 2019

Kerry chief mulls bad weather payments

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
Gavin McLoughlin

Gavin McLoughlin

Kerry Group CEO Edmond Scanlon 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."

He said 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.

The company posted revenue growth of 1.4pc year-on-year in the first half. Sales volumes were up 3.6pc but reported revenue was held back by currency movements.

Volumes grew 4.1pc in the taste and nutrition division and 1.3pc in the consumer foods division.

Asked if the company might eventually look to sell the consumer foods business, Mr Scanlon said: "The business is getting smaller in the overall scheme of things [in the proportion of the company's revenues and profits it makes up] but it's still an important leg to the stool.

"It offers a lot of insights because of the way it's positioned in the UK market, to the rest of the business. The business is growing, it's outperforming its markets, they're the hallmarks of a good business." Shares in Kerry Group rose 1.9pc in Dublin yesterday to €93.85 each.

Irish Independent

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