Kerry Group delivered an upbeat message to shareholders yesterday at the group's annual general meeting in Tralee, writes Anne Lucey.

Chief executive Hugh Friel told more than 100 shareholders at the Brandon Hotel alongside the Kerry Group headquarters he had "a much more comfortable feeling" than he had 12 months ago when he warned of heading into "strong headwinds", citing energy and currency costs.

The huge rise in energy costs, though hitting the group hard, had been weathered and the company was better poised to deal with energy inflation costs this year, shareholders heard.

Kerry's core consumer food categories were showing encouraging profitable growth, the group was continuing its focus on cost recovery and on its restructuring programme and the balance sheet was strong, the meeting was told.

Sales revenue from the ingredients business was now in excess of €3 billion, the focus on nutrition and health by consumers would remain centre stage, and there was a recovery in the chilled meals sector, with increased demand also for "food to go", Mr Friel said.

Kerry had had "a good start" in 2007 with solid organic growth in the ingredients business, he added.

"We expect an outcome for 2007 in line with market expectations."

He told shareholders the company's strong balance sheet left it "well positioned to avail of business growth opportunities". While no big acquisition was on the horizon right now, there were plenty of bolt-on acquisitions in the pipeline, particularly in the US and Europe, he said after the meeting.

In the current phase of rationalisation, around a dozen plants had been closed across 11 countries.

Referring to last year's more downbeat annual meeting, Mr Friel said it had been a question of "facing reality" when energy inflation had come at the global food giant "like lightning".

The group increased revenue by almost 5 per cent and reached trading profits of €384 million, "a new high for the group in a challenging environment", Kerry's chief financial officer Brian Mehigan told the meeting.

Questions from the floor focused on the group's future in the Chinese market.

Mr Friel said the Asian market as a whole - beginning with Malaysia, "an inspired choice" - had been good to Kerry Group.

With China, where Kerry now has an ingredients manufacturing plant, Mr Friel said: "We have moved from toe in the water to a position where we are a little more optimistic and are prepared to take another few steps.

"I think this is the toughest place we have been to. There is nothing easy in the Chinese markets. It's very competitive, very tough."

Six months ago he would have been a lot less optimistic, he added, but Kerry was now looking at some bolt-on acquisitions.

Nutrition for children and young adults had become very big in China.

Asia Pacific markets had reported growth in all territories for Kerry in 2006, with sales revenue increasing by 9.2 per cent to €363 million in 2006.

The region accounted for 12 per cent of the group's total ingredients business.