Irish market a 'challenge' - Kerry

Net profit and business volumes rose at Kerry Group last year, but the Irish market remained challenging, the group said today.

In preliminary results for the year ended December 31st, the food group said net profit rose to €201.2 million compared to €177 million in 2008.

However, the company was hit by falling consumer spending, which caused sales to fall to €4.5 billion, a 4.8 per cent reduction on a like-for-like basis. But the company said allowing for the elimination of non-core activities, lower pricing and trading currency movements, continuing business volumes were 2.2 per cent ahead.

Volumes were up 2.9 per cent in the ingredients and flavours sector, while consumer foods recovered throughout the year to equal the 2008 level. Trading profit was up 3.8 per cent on a like-for-like basis to €422 million, while trading profit margins rose in both ingredients and flavours, and consumer foods, mainly due to business efficiency programmes.

Pre-tax profit rose 6 per cent to €335.8 million and adjusted earnings per share were up 8.2 per cent to 166.5 cent.

"Kerry made excellent progress in 2009, despite the impact of the challenging economic conditions in all major economies on consumer purchasing," the firm said in a statement today.

"The group maintained its focus on building and strengthening its core businesses which contributed significantly to the robust operational and financial results for the year and augurs well for the future profitable growth of group businesses."

However, the Irish market was particularly challenging for the group, with its brands underperforming and the group further hit by the depreciation of the sterling/euro exchange rate.

A fall in consumer spending of 7.5 per cent also affected figures. Food prices in the wider market were subject to deflation of 8 per cent, leading to increased promotions and the growth of private label offerings at the expense of more well-known brands.

In contrast, the UK market saw spending on groceries rise, despite an overall fall of 4 per cent in consumer spending, as increased promotional activity encouraged shoppers.

"The Kerry business model performed robustly in what was a challenging environment in 2009 - delivering excellent product and business development opportunities, good margin improvement and cash generation," said chief executive Stan McCarthy.

The company forecast earnings growth this year would be in the range of 182 to 185 cent per share, compared to 166.5 cent in 2009.

Shares in the company were 2.6 per cent up to €23.35 on the Dublin market just after 12.30pm.