Kerry ups forecast as H1 beats expectations

By Guy Montague-Jones

- Last updated on GMT

Related tags Revenue Kerry

Ireland-based Kerry Group has upped its earnings forecast for the full year after reporting strong growth in overseas sales, supported by a recovering dairy sector.

Overall sales revenue for the first six months of the year rose 6.7 per cent to €2.4bn, helping to take trading profit up 12.9 per cent to €204m.

On the back of this performance, Kerry said the company is confident of exceeding its previous guidance. The company said: “Notwithstanding raw material/input cost headwinds, we now expect to achieve mid-teen growth in adjusted earnings per share for the full year.”

Dual growth strategy

The Irish business said it remained confident in its dual growth strategy of pursing international growth through its ingredients and flavours portfolio and continuing to build its UK/Irish consumer goods business.

Looking at consumer foods as a whole, sales were up 0.5 per cent to €885m on a like-for-like basis and trading profit rose 4.4 per cent to €63m.

In the weak Irish market, Kerry said significant marketing investment and a focus on value helped the company stabalise its position in consumer goods in H1. In a statement, the company said its consumer dairy brands performed well in Ireland overall with a strong performance from the recently acquired Dairygold brand.

As for the UK consumer goods market, Kerry said it achieved good growth. Among its dairy products, the company said Cheestrings benefited from the launch of ‘Cheestrings Shots’, which will be followed shortly by a ‘Cheestrings Spaghetti’ range.

Ingredients and flavours

Meanwhile, at Kerry’s ingredients and flavours arm, H1 sales revenue grew 3.9 per cent to €1,788m and trading profit increased 9.3 per cent to €164m.

Revenue growth was positive across all regions although results were strongest in the Asia-Pacific region, where sales were up 11.8 per cent to €248m.

Kerry produces a broad range of ingredients and flavours for various applications in the food industry. It has diversified out of being a specialized dairy processer but still retains a significant pressure in the dairy market, buying about €1bn litres of milk per annum.

Commenting on the current health of the dairy market, Frank Hayes, director of corporate affairs at Kerry said: “The market improved in Q4 2009 and that improvement has continued into 2010 to reach a degree of stability today.”

Kerry has been able to gradually increase the price it pays farmers to 30 cents a litre in June and July.

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