McCarthy talks it up at Kerry

Kerry Group's new boss Stan McCarthy made a solid debut this week at his first results presentation.

Analysts were guided that earnings for the current year and next would be slightly ahead of expectations and he talked bullishly about doubling revenues to €10 billion over the next five to six years.

Last year's results for Kerry was all the more impressive given a backdrop of rising input and energy costs and the impact of a strong euro against sterling and the dollar.

The share price bounced by 1.5 per cent.

McCarthy spoke of achieving the 100 per cent turnover increase through a mixture of organic growth and acquisitions, although the company was light on detail in regard to the latter.

Kerry has long been a well-managed food group with solid brands, including Golden Vale, Denny and Low Low. Its consumer foods division, however, have been hit by changing tastes and rising input costs.

Under Denis Brosnan's leadership, Kerry achieved phenomenal growth and was recognised as one of the best performing quoted food stocks in the world.

Earnings growth of 15 per cent- plus a year was the order of the day. All of this from humble origins - it began life in the early 1970s from a mucky caravan in Kerry.

Brosnan was always going to be a hard act to follow, as McCarthy's predecessor Hugh Friel discovered.

Friel presided over the group's first profit warning.

He also failed to deliver the knock-out deals that the markets craved to drive earnings, which flagged under his watch.

This was partly due to being outbid on a number of deals by private equity players who had plentiful access to cheap cash.

The global credit crunch has put the kibosh on that. Banks are furiously pruning their lending and the cost of money has risen.

This is good news for Kerry, a highly cash generative business.

Goodbody Stockbrokers has noted that Kerry can "comfortably afford" to spend €500-750 million on acquisitions this year.

Breeo, the consumer foods division of Dairygold here, could be first on the list. But Stan will have to shoot bigger game to have investors licking their lips and prove to shareholders that he really is the man.