Kerry Group delivered a 13 per cent rise in operating profits last year as sales broke through the €4 billion level for the first time.

The food and ingredients group, whose brands include Denny sausages and Kerry Spring water, also said 2005 had got off to a good start and it expected to meet market expectations of 7 per cent earnings growth.

It reported operating profits of €349 million and a 10 per cent rise in earnings per share to 123.7 cent, in line with market expectations, despite a negative current impact from the falling dollar.

Sales rose to €4.1 billion, an 11.8 per cent increase on 2003 or a rise of 4.2 per cent if acquisitions and the foreign exchange impact are stripped out.

The Tralee-based company said it would pay a final dividend of 9.5 cent per share, bringing the total dividend for the year to 14 cent per share, an 11 per cent increase on 2003.

Kerry's food ingredients business, which was boosted by the $440 million (€333.7 million) purchase of Quest last year, remained a strong performer as sales increased by nearly 16 per cent to €2.78 billion, a 5 per cent increase on a like-for-like basis. Operating profits rose by 17.5 per cent to €257 million, or a like-for-like increase of 9 per cent, while its operating margin rose by 10 basis points to 9.2 per cent.

But its consumer foods business had a tough year as it faced extremely competitive trading conditions in the poultry sector and operational difficulties at its UK pastry business in Poole.

Sales rose by 3 per cent to €1.66 billion or 2 per cent on a like-for-like basis, while operating profits increased by 2 per cent to €116 million, or an underlying rise of 1 per cent.

"While satisfactory volume growth was achieved, the operating margin at 7 per cent was slightly reduced relative to the previous year due mainly to adverse currency transaction rates," Kerry said.

A geographic breakdown of the results showed that European markets accounted for €2.7 billion of sales, a 9 per cent increase on the previous year.

In the US, sales from its ingredients and flavours business were up by 14 per cent to €1.12 billion, reflecting like-for-like growth of 6 per cent year on year.

Although still a small part of its overall business, the Asia Pacific region delivered a very strong performance for the group, with sales up by 31 per cent to €287 million, a 15 per cent increase on a like-for-like basis.

Kerry chief executive Hugh Friel said the company, which will begin work on a new manufacturing facility in Hangzhou in China in mid-year, expects to maintain double-digit growth in this market in the coming years.