Kerry Group on track to hit annual targets despite margin pressures
IT was a case of "business as usual" for Kerry Group yesterday, as the company said it remained on track to hit its annual targets despite currency exchange and margin pressures.
In an interim management statement (IMS), the company said revenue rose 14.8pc year on year during the first quarter of 2011.
Like-for-like revenues were up 10.5pc and volumes grew 4.1pc. Importantly, the company said its targets of earnings per share of between 210c and 218c were unchanged. Net debt increased slightly from year end to €1.16bn.
Kerry also said it had agreed a revolving debt facility of €1bn with a number of banks. The facility had originally been for €750m but was oversubscribed.
Chief executive Stan McCarthy said the company had performed well so far and would continue to look at acquisitions over the remainder of the year.
Total acquisitions of between €300m and €1bn, which he had mooted when announcing the company's annual results earlier this year, were still possible, he added.
"We are always looking out for value and if there are deals to be made that are right for the group then we'll do them."
There is nothing "concrete" in the pipeline, however. Kerry spent €25m on two acquisitions in Q1.
Growth was driven by the ingredients and flavours business, where volumes grew 4.7pc. The Irish consumer market appears to have "stabilised", Mr McCarthy said.
Despite maintaining margins so far, he warned this was not the whole story.
"The likes of oil has fallen back in recent weeks but it is still over $100 a barrel so we have to watch costs carefully.
"The currency translation impact on the Q1 result was broadly neutral, but we expect currency rates as they are to have a negative impact on EBIT over the remainder of the year."
Goodbody Stockbrokers' analyst Liam Igoe welcomed the statement, pointing to the high volume numbers in particular.
"They're a very strong set of numbers again, especially considering Q1 would have seen a carry over from 2010 in terms of higher input costs so they are to be welcome."
The IMS was released by the company at their AGM, which saw chairman Denis Buckley strongly criticised for his role as chairman of the investment company One51. Kerry Co-op holds some 6pc of the Phillip Lynch-led company, which had a well-publicised boardroom battle last summer.
Shareholders claimed the difficulties facing One51 over recent months reflected poorly on Kerry because of Mr Buckley's dual role, with one going so far as to call on Mr Buckley to resign as chairman of the investment company.
Speaking with reporters after the meeting, Stan McCarthy declined to comment on the issue:
"Kerry Group has a corporate governance structure that's been built up over 25 years and works well. That's our mantra, and with regard to One51, that's not for us to comment."
Kerry closed up 0.35pc at €28.94, having been down for most of the day on a placement of some 1.5 million shares by the co-op. The proceeds of the placement will be used by the co-op mostly to pay down debt.