Kerry expects to raise 2009 earnings to higher forecast

KERRY GROUP is expecting to increase its earnings for the full year to the higher end of forecasts as business volumes showed a modest improvement.

A trading statement for the 10 months to the end of October showed continuing business volumes were 1.5 per cent ahead on a group-wide basis. Overall revenues were down 6 per cent on the same period in 2008, a trend the company attributed to currency changes, lower pricing and business restructuring.

A challenging trading environment in Ireland and sterling’s weakness against the euro hit Kerry’s consumer foods division. However, the company said the unit continued to make good progress, with business volumes back 0.8 per cent compared with the same period in 2008.

“In particular, the performance of the division’s UK business remains very encouraging – compensating for the reported revenue decline in Ireland arising from trading down and lower pricing, coupled with the contraction of sales from Ireland to the UK market due to currency issues,” the statement said.

The UK market saw good growth for Richmond in the sausage sector, while Wall’s made “solid” progress in the pastry sector, and Mattessons Fridge Raiders grew in the meat snacks segment.

Exports for the frozen ready meals sector were affected by the depreciation of sterling. However, the group’s UK-based chilled ready meals business performed well, it said, while cheese and spreads performed satisfactorily in the Irish and UK markets.

The company said progress in the integration of the Breeo Foods business, which was completed earlier this year, was going well and had performed as expected. Breeo was formed following the restructuring of Dairygold, and was bought by Kerry for €140 million.

Kerry said its ingredients and flavours “go-to-market” programme was continuing to yield solid results, with underlying volumes showing 3 per cent growth year-to-date.

In the Americas region, volumes grew by 3 per cent, with savoury and dairy ahead and cereal and sweet delivering a mixed performance as demand slowed for premium products.

The Europe, Middle East and Africa region was a challenging market for Kerry, as economic conditions hit food and beverage consumption trend. However, the region recorded underlying volume growth of 2.3 per cent.

Asia-Pacific, meanwhile, saw volumes grow 9.1 per cent.