Kerry Group to spend more than €400m on deals in year ahead
Kerry Group will spend "at least" €400m on acquisitions after it shed assets and repositioned its consumer foods division.
Chief executive Stan McCarthy said he would be "dissappointed" if Kerry does not spend at least its free cash flow this year as well as the proceeds from the sale of an Australian bakery business his firm is in the process of offloading.
"I would be dissappointed if we didn't spend at least the value of our free cash flow, which will be about €400m, and the proceeds from the sale of an Australian business," he said.
Kerry admitted on Tuesday that it was trying to sell its Pinnacle bakery business in Australia.
Analysts believe that business could be worth about €40m.
News of Kerry's acquisition plans came as the food giant reported a profit after tax of €479.9m. While that figure was well ahead of last year and in line with market expectations, shares in the company dropped 1.6pc to €63.66 though after the firm's revenue shrank by 1.4pc to €5.8bn. Adjusted earnings per share rose 8.1pc to 278.1 cent while the final dividend has been increased 12pc to 31.5 cent per share.
Growth was driven, as usual, by the ingredients and flavours division, which saw increases in both revenues and margins.
Ingredients and flavours now covers the vast majority of the company's business.
The smaller consumer foods arm continued to struggle. Revenue from this sector fell 0.7pc to €1.5bn, while margins continued to slide. EU milk quotas will be removed on April 1 after more than 30 years.
While Mr McCarthy said his firm could handle a 28pc increase in milk production overnight, the milk market was still "very volatile" and demand could vary. He believes Kerry will eventually handle 20pc more milk.