Full-year profit forecasts for the Kerry Group are likely to be revised upwards, after the group produced an excellent set of half-year results which were comfortably ahead of forecasts.

The continued weakness in equity markets meant that Kerry did not trade from its overnight £8.00, and the share is still a long way off its £11.40 high of earlier in the year.

However, market sources believe that, once stock markets settle down, Kerry is likely to be of the main beneficiaries of any renewed interest in equities, having fallen nearly 30 per cent from its high.

The results include a 14-week contribution from the big Dalgety acquisition but, even excluding the acquisitions, there was strong growth in sales and operating profits, with operating margins edging ahead from 7.2 per cent to 7.3 per cent.

Sales from continuing operations rose from £625.2 million to £704 million, with acquisitions adding a further £73.8 million - of which the Dalgety business accounted for around £67 million.

Operating profits from the continuing operations rose from £44.9 million to £52 million, while the acquisitions added £4.8 million. The operating profits from the acquired businesses would have been £5.9 million were it not a £1.1 million charge which was written off directly against operating profits.

Kerry succeeded in boosting its margins in both of its two main sectors - ingredients and foods. Ingredients had a near 13 per cent increase in sales to £402.5 million, while operating profits were up 15.4 per cent to £37.8 million. The added-value foods businesses increased sales to 13.3 per cent to £273.1 million, with operating profits up 18 per cent to £13.6 million.

The total operating profits of £56.9 million were knocked back to £38.1 million at the pre-tax level, mainly due to a big increase in interest charges from £13 million to £16.6 million and the first-time inclusion of a £2.2 million goodwill charge arising from the write-off the £216 million goodwill associated with the £343 million of acquisitions in the first half. The £16.6 million interest charge is covered 3.4 times by operating profits, the same interest cover as at June, 1998. Net debt at the end of the half-year was £527 million - up from £349 million - and reflecting the acquisition activity in the first half.

A group spokesman, Mr Frank Hayes, declined to speculate on the full-year outcome, but Kerry is understood to be comfortable with existing analyst forecasts of £90 million pre-tax profits and earnings per share around 45p.

Kerry's shareholders are to receive a 15 per cent increase in the half-year dividend to 1.68p per share.