Kerry Group has met its target of achieving double-digit earnings growth for 2003, despite taking a €30 million currency hit on the translation of its sterling and dollar profits into euros.
The multinational food firm yesterday posted earnings per share of 112 cents for the year ending on December 31st, up 10.1 per cent on 2002. The performance came as growth in operating profits was limited to just 1 per cent and turnover fell back by 1.6 per cent in real currency terms.
Kerry Group's chief executive, Mr Hugh Friel, acknowledged the year had been marked by "significant currency shifts" but said the firm had still managed "an excellent operational and financial performance".
He said that 2003 operating profits of €308.5 million would have been more than €30 million higher if currencies had been steady throughout the year. Turnover at €3.7 billion would have been €300 million stronger on a constant-currency basis.
Analysts said the overall performance was creditable against the adverse currency backdrop. They also took heart from the firm's strongly positive outlook for the current year.
Mr Friel said he was "extremely confident" about 2004, although he was cautious on the potential impact of currency movements.
"We are confident of meeting market earnings expectations in 2004," he said, adding that the firm would continue to "grin and bear" the impact of currency fluctuations on its balance sheet.
Kerry, which has become increasingly involved in nutrition-focused foods of late, logs about 92 per cent of its total sales in the currency of the production country but has a policy of not hedging its balance sheet.
Mr Friel made it clear there are no plans to change this stance going forward.
"Hedging is terrific in hindsight if you get it right," he said, predicting that currency movements would continue to be "very significant" for the company this year.
Turnover at Kerry's Irish operations grew by 2.6 per cent to €1.3 billion on a like-for-like basis but this was transformed to a decline of 3 per cent in real currency terms as sterling translation dented sales figures in poultry and ready meals.
Irish operating profits rose by some €7 million to €69 million over the year, while other European operations saw operating profits grow by almost 2 per cent to €111.5 million.
The effect of dollar weakness was most evident in profits drawn from the US and South America, which fell back to €113.4 million from €120.5 million.
In Asia, where the group is keen to seek acquisition opportunities over the coming year, operating profits rose to €14.5 million from €12.7 million.
Mr Friel said Kerry was particularly interested in acquiring a "brownfield" site in China. Such an acquisition would allow the company to upgrade an existing facility according to its own specifications. The company already has operations in Malaysia and Thailand.
Kerry spent €208 million on five acquisitions in the US last year, mostly in the flavours and seasonings sectors. Cash flow was strong against this backdrop, with free cash flow for the year exceeding €200 million.
Mr Friel said the firm was continuing to examine a full pipeline of potential purchases, but effectively ruled out a substantial Irish deal.
Some market commentators had suggested that the firm could be a suitor for Greencore or C&C.
He indicated nonetheless that the company was interested in larger deals around the world and rejected suggestions that it was biding its time on making a move.
"There are opportunities out there but when they become available remains to be seen."
Kerry will pay a final dividend of 8.6 cents per share, up almost 10 per cent on the second half of 2002.
The group's shares gave up some ground yesterday, shedding 20 cents to close at €14.60.
