Pre-tax profit of €433m at Kerry foods

TRADING PROFIT at Kerry Group topped half a billion euro last year, as the Tralee-headquartered company brushed off a difficult consumer market and rising input costs to post record sales.

Revenue increased by 6.4 per cent on a like-for-like basis to reach €5.3 billion in 2011. While the increase was due in part to higher pricing, volumes were up 3.3 per cent.

Pre-tax profits at the company, which employs more than 23,000 people across 25 countries, rose by 10.3 per cent to €433.4 million, up from €392.8 million the previous year. Operating profit rose by 5.7 per cent to €479.4 million.

Earnings per share were 11 per cent higher at 213.4 cent, while the total dividend for 2011 was 32.2 cent, representing an 11.8 per cent increase on 2010.

Presenting Kerry’s results yesterday, chief executive Stan McCarthy highlighted the 3.3 per cent growth in business volumes as a key strength of the company.

Kerry Group also managed an 8 per cent increase in input costs during the year through a combination of pricing and business efficiency savings, he said.

The results, which beat some analysts’ expectations, were at the upper end of the company’s guidance range.

Kerry’s ingredients and flavours division – which represents 70 per cent of revenue – was the main driver of growth.

Revenues at the division grew by 7.7 per cent during the year, of which 4 per cent was attributable to volume growth.

Kerry’s consumer food division, which was responsible for €1.67 billion in revenue, had a more challenging year, though some analysts noted it had performed better than expected in light of dampened consumer trends.

Business volumes at Kerry’s consumer foods division were up 1.1 per cent. While volumes in the UK were up 2.6 per cent, boosted by a strong performance by chilled meals and brands such as Richmond and Mattessons meat products, volumes in Ireland were down by 2.6 per cent. The frozen meal category remains under pressure, the company said. Promotional activity also hurt revenues.

During 2011 Kerry Group bought or completed the acquisition of around 10 businesses, the most significant of which was food giant Cargill’s flavour business.

Mr McCarthy said that acquisitions would continue in 2012, but “probably not at the same level as last year”.

He said that Africa remained a key focus for the company as Kerry Group was underrepresented in the continent relative to its size.

Kerry Group operates 150 manufacturing facilities across the 25 countries it is in.

Some 60 per cent of its revenue is generated in the EMEA (Europe, the Middle East and Africa) region, 11 per cent in the Asia-Pacific and 29 per cent in the Americas.

Asked whether Kerry would consider moving from the Irish stock exchange, Mr McCarthy said it was a “non-issue” for the company. “It is not something we are considering. Our Irish shareholder base is very important to us. Neither would I see it as an issue for our international shareholder base.”