Analysis: Higher energy costs, a negative foreign exchange impact and Jamie Oliver were among the many challenges faced by Kerry Group last year.

The celebrity chef's focus on the poor nutritional content of many frozen ready meals was one of the factors which hit the company's consumer foods division. Along with a number of other issues, such as the high cost of oil, it limited Kerry's earnings growth to single digit figures for the second year in a row.

While the 7 per cent increase in earnings per share was seen as "solid", by Kerry's historical standards it looks somewhat pedestrian.

Now in its 20th year as a publicly quoted company, the Tralee-based firm has delivered double- digit earnings growth in all but two of the last 10 years.

However, 2006 is set to see a repeat of last year's growth rate and it is likely to be 2007 before the firm's growth rate again picks up. While energy costs are set to remain a factor in the current year, the foreign exchange situation should be more favourable for the company.

Kerry said its chilled foods business has already begun to recover and it intends to focus on the premium end of this particular market.

Analysts also expect Kerry to reap the benefits of a year of consolidation in recently acquired businesses and restructuring of existing business.

Whether all this is sufficient to return Kerry to the double-digit earnings growth it enjoyed for most of the last decade remains to be seen.

But if the company is to continue the process of transforming itself into one of the leading players in the global ingredients market, it needs to get back on the acquisition trail.

Kerry chief executive Hugh Friel said yesterday that acquisitions remained a key focus for the group. But he also said that those in its pipeline were of a bolt-on nature, in the €50-€60 million range. The company expects to do one or two such deals in the first half, followed by up to three in the second half.

Despite continued talk of industry consolidation, the bigger purchases that can really propel Kerry forward have been proving elusive.

The company lost out to private equity interests in the competition to buy the foods ingredients business of Denmark's Chr Hansen last year while Germany's Degussa sold its food ingredients business to the US firm, Cargill.

Mr Friel appeared to rule out any purchase of scale again this year. "There is nothing out there for sale that we are interested in that could trigger something in the next five to six months," he said yesterday of large scale acquisitions.

"If something of size was to be done by the end of the year, you'd need to know about it now," he said.

Instead, the company is continuing its geographic expansion beyond its core markets of western Europe and the US the hard way - by building from the bottom up.

Asia, as well as eastern Europe and South America, will be the main focus for the company.

But as Mr Friel points out, "targeting new and emerging markets is not an easy thing to do".

It will require between five and eight years before the company starts to see the payback from its investment in these areas.