Kerry posts revenue of €6bn as weak euro offsets lower pricing

Food group Kerry saw revenues grow to a record €6.1 billion last year with favourable currency shifts and lower raw material costs offsetting a decline in pricing in Europe and the US.

The company spent more than €900 million on acquisitions in 2015, equivalent to the previous five years combined, in an effort to reposition the business to exploit emerging trends in the sector.

The changing marketplace is being driven by stronger consumer preferences for health, authentic and ‘clean label’ products with growth in the foodservice channel outstripping traditional retail outlets, the company said.

Its spending spree saw it acquire US flavouring business Red Arrow, cocktail mix manufacturer Island Oasis and health food group Wellmune.

The company which makes Dairygold, Dennys and Cheesestrings reported a pre-tax profit of almost €603 million for the year to the end of December.

Sales in its taste and nutrition business, which supplies flavourings and ingredients to other food and drink businesses, grew by 4 per cent, in volume terms, to €4.7 billion.

The division now accounts for 76 per cent of group revenue and 84 per cent of the group’s trading profit.

Kerry’s consumer foods division generated revenue of €1.5 billion on the back of a 3 per cent growth in volumes.

Sales revenue in the Americas region increased by 21.4 per cent to €2.3 billion, reflecting 4.1 per cent volume growth and nearly 2 per cent lower pricing.

Business volumes from its European, Mideast and North Africa regions increased by 0.9 per cent to €1.55 billion with overall net pricing falling by 2.9 per cent.

While European economies continued to recover in 2015, the overall deflationary environment continued to heighten competiveness in food and beverage markets, the company said.

It also noted that geopolitical instability continued to constrain development in regional developing markets.

Despite the global downturn in dairy, Kerry said demand for protein rich foods continues to grow in Asia.

Adjusted earnings per share grew by 8.2 per cent to 301.9 cent with the company’s board recommending a final dividend per share of 35 cent, while the total dividend for the year will rise by 11.1 per cent to 50 cent.

Overall, the company described 2015 as a challenging year marked by regional variation in economic growth, geopolitical instability, and significant commodity and currency volatility.

“In a record year of business development in 2015, the group achieved a strong financial performance, delivering continued business margin expansion and 8.2 per cent growth in adjusted earnings per share,” Kerry’s chief executive Stan McCarthy said.

Mr McCarthy said the company expects to achieve 6 per cent to 10 per cent growth in adjusted earnings per share in 2016 taking into account a 3 per cent currency headwind at today’s exchange rates.

On the back of the result, shares in the company rose by 4.5 per cent to €74.17.