KERRY Group has reported a strong set of results for 1995, the first full year of operations following the £250 million DCA acquisition. Sales were up 36 per cent to £1.2 billion and pre-tax profits up 8.7 per cent to £43.2 million. The figures were in line with market forecasts, although Kerry shares eased 5p to 525p.
For the first time since it went public 10 years ago, Kerry has produced a detailed geographical, divisional and sales breakdown of its sales and operating profits. This breakdown indicates clearly the impact of the 1994 acquisitions of ingredients companies DCA in the US and Margetts in Britain on Kerry's business.
Kerry is now focused on three sectors ingredients, food and agri-business. Ingredients now accounts for 55 per cent of turnover and more than 70 per cent of operating profits. Over three quarters of the group sales are now overseas
There were few surprises in the Kerry figures, but one was the sharp fall in the tax charge from £7.5 million to £5 million. This was the result of a change in the American tax code which allows Kerry to write off goodwill on an accelerated basis over 15 years.
The £57 million fall in Kerry's debt from £371 million to £314 million was also slightly bigger than expected, and reflects the group's exceptionally strong cash flow.
Within the ingredients business, most of the year was spent integrating the DCA and Margetts businesses with the existing ingredients activities. Since the year end, Kerry has spent £54 million on the Ciprial fruit ingredients business in France and Italy.
Later in the year, Kerry is expected to buy out the remaining DCA operations in Australia for about £5 million and is also planning to sell DCA's Bakers Aid catering equipment subsidiary in the US for between $45 million and $50 million (£28.6 million-£31.8 million).
Last year was also the first full year of operations of the integrated Kerry Foods business and sales in the branded goods business grew by 12 per cent. Consumer foods sales now account for 40 per cent of the group's total sales. Britain and mainland Europe now account for 39 per cent of £1.2 billion sales, North America accounted for 38 per cent while sales in Ireland were 23 per cent of the total.
Strong cash flow has allowed Kerry to cut its debt by £57 million to £314 million while share holders' funds increased from £308 million to £330 million. As a result, gearing fell from 121 per cent to 95 per cent and is likely to fall towards 80 per cent by year end.
Operating cash flow increased from £59.2 million to £110.3 million and interest costs were up from £11.6 million to £29.7 million, reflecting the DCA acquisition costs.
Kerry took the net loss on the disposal of the meat businesses above the line and these losses of £2.5 million were balanced out partially by £800,000 gains on the sale of other assets.
Earnings per share increased from 23.5p to 30.1p before goodwill writeoff and a slightly higher than expected final dividend of 2.23p per share is being paid.
