Kerry reaffirms earnings guidance as volumes grow

Trading profit rose in first quarter despite continued challenging conditions

Food group Kerry has reaffirmed its full-year earnings guidance after reporting a 2.9 per cent growth in business volumes in the first quarter.

The company which makes Dairygold, Dennys and Cheesestrings, said group trading profit was up 50 basis points, reflecting a 40 basic points improvement in its tast and nutrition business and a 20 basis points jump in Kerry Foods.

Kerry said net pricing was down 1.5 per cent in the quarter in line with lower input pricing. Revenues rose 0.9 per cent due to a number of factors including business volume growth, lower pricing and currency fluctuation.

The company said it is confident of delivering between 6 to 10 per cent growth in adjusted earnings per share to a range of 320 to 332 cent per share in 2016 as previously guided.

The group, which spent more than €900 million on acquisitions last year in a spending spree that saw it acquire US flavouring business Red Arrow, cocktail mix manufacturer Island Oasis and health food group Wellmune, said integration of the new businesses was progressing well.
Challenging conditions

“While overall market conditions remain challenging, Kerry has sustained a solid innovation pipeline in response to customer requirements and consumer demand for enhanced nutritional, wellness and convenience offerings,” it said in an interim management statement ahead of its annual general meeting in Dublin on Wednesday.

Kerry said trading conditions in the Irish and UK consumer foods sectors remains “highly competitive.” However, it said it delivered a good performance based on capitalising on current snacking, convenience and food-to-go trends.

Business volumes in its consumer foods division increased by 2.1 per cent compared to the same quarter a year earlier, while pricing decreased by 1.3 per cent.

Kerry said its taste and nutrition business achieved 3.1 per cent business volume growth in the quarter with pricing declining by 1.5 per cent. Divisional trading profit margin increased by 40 basis points.

At the end of March, net debt stood at €1.6 billion, compared to €1.7 billion at the end of 2015.

“The group’s consolidated balance sheet remains strong which will facilitate the continued organic and acquisitive growth of group businesses,” it said.

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