Kerry sees EPS, volume growth

10 Aug 2016

Kerry Group has announced adjusted EPS up 7.5% to 133.8 cent, and group revenue of €3 billion reflecting 3.2% business volume growth. Taste & Nutrition saw 3.5% volume growth, while Consumer Foods grew 2.3%.

Kerry sees EPS, volume growth

Kerry Group has announced adjusted EPS up 7.5% to 133.8 cents, and group revenue of €3 billion reflecting 3.2% business volume growth. Taste & Nutrition saw 3.5% volume growth, while Consumer Foods grew 2.3%. Trading profit increased by 7.4% to €322m, and group trading margin was up 70 basis points to 10.6%. Earnings guidance for the full year was reaffirmed.

“Despite the challenging market landscape we delivered a solid financial performance in the first half of 2016, with continued margin expansion, strong cash generation and a 7.5% increase in adjusted earnings per share,” said Kerry Group Chief Executive Stan McCarthy. “While we are confident of delivering an underlying trading performance in the

full year as previously guided; taking into account the increased currency headwinds of 5% at current exchange rates, growth in adjusted earnings per share in 2016 is expected to be towards the middle to lower end of the 6% to 10% range of 320 to 332 cent per share.”

Good business momentum was maintained, outperforming market growth rates. Group revenue on a reported basis was broadly unchanged at €3 billion reflecting good volume growth offset by significant currency movements and lower pricing relative to H1 2015. Business volumes grew by 3.2% in the period reflecting a strong performance in American markets, lower volume growth in the EMEA region in particular in regional developing markets, and strong business growth momentum in Asia. Net pricing was 2.2% lower against a background of approximately 4% lower raw material costs. Currency headwinds relative to H1 2015 contributed an adverse 3.7% translation impact relative to revenue. Taste & Nutrition achieved 3.5% growth in business volumes and pricing was 2.2% lower. Kerry Foods’ business volumes grew by 2.3% and pricing was reduced by 2.1%. Against a background of significant product churn in the period, the Group continued to improve overall business quality and operational efficiencies. Group trading profit increased by 7.4% to €322m. The Group trading profit margin increased by 70 basis points to 10.6%. This reflects a 70 basis points improvement in trading margin in Taste & Nutrition to 12.8%, a 30 basis points improvement in Consumer Foods’ margin to 8.3%, and reduced spend on the Kerryconnect Programme contributed 10 basis points. Adjusted earnings per share increased by 7.5% to 133.8 cent (H1 2015: 124.5 cent). Basic earnings per share decreased by 6.5% to 126.4 cent (H1 2015: 135.2 cent), (basic earnings per share in H1 2015 included a credit relating to the gain on the sale of the Pinnacle Lifestyle Bakery business in Australia). The interim dividend of 16.8 cent per share represents an increase of 12% over the 2015 interim dividend.

Kerry said its taste portfolio and nutrition & general wellness enabling technology platforms continued to benefit from evolving consumer convenience, health & wellness and localised taste preferences. Consumers increasingly demand ‘clean’ simple and clear labelling, culinary variety, functional indulgence and enhanced nutritional values driving retail and foodservice requirements for increased innovation and market-ready solutions. Kerry maintained a strong innovation pipeline in all regions in the period and, building on the Group’s significant acquisition investment in 2015, continued to progress integration of the acquired businesses and to broaden the acquired technologies into wider taste and nutrition applications in all regions. The acquired businesses performed well to-date and provide significant scope for further international market development. Taste & Nutrition reported revenue increased to €2,379m reflecting 3.5% business volume growth and 2.2% lower net pricing. Trading profit grew by 7.9% to €304m reflecting a 70 basis points increase in divisional trading margin to 12.8%.