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Kerry shares rise 2pc after 'solid' quarter

SHARES in Kerry Group rose nearly 2pc after it reported higher margins in the first three months of its year and said it was on track to hit its profit forecasts for 2013.

In an interim management statement that coincided with the firm's annual general meeting, Kerry said it had a "solid" first quarter.

Business was driven by the company's ingredients and flavours (I&F) business, which now drives the bulk of Kerry's sales and profits.

Trading volumes from existing business rose 2.2pc year on year on the back of "strong growth" in I&F.

Most of the expansion came in the US, as the company began to see the benefits of its purchase last year of the flavours company, Millennium Foods.

That growth offset "challenging" conditions in Europe and allowed the company to increase its margins in the ingredients business by 50 basis points – an important measure of the company's profitability.

On the consumer foods side of the house, which is focused mainly on Ireland and the UK, Kerry came under pressure as volumes declined marginally yet again. However, despite that slide, the business increased its margins by 10 basis points.

Restructuring

"While demand conditions in the Irish and UK consumer foods' markets broadly stabilised, overall market performance was impacted by the challenges in cost recovery following significant raw material inflation," said the firm.

"Kerry Foods' core business segments performed well, notwithstanding the difficult market environment."

Looking ahead, the company said it expected to increase its earnings per share this year by 7pc to 11pc to as much as 260c.

Company chief executive Stan McCarthy has previously indicated that growth this year will more than likely come from the ingredients business, where Kerry has focused much of its resource in recent years.

It is also close to concluding its 'One Kerry' internal restructuring, which is likely to deliver significant savings in the years ahead.

By mid-afternoon trading, shares in Kerry had risen more than 1.4pc to €45.55. The shares are up a third in the last year.

Irish Independent