Kerry Group shares have risen sharply after the group reported half-year results that comfortably beat market forecasts. Against the background of falling prices in London, Kerry shares jumped 15 cents to €11.60 (£9.14) after hitting €11.75 earlier, regaining some of the ground lost in the past three months when the shares underperformed the Irish market by more than 8 per cent.

Kerry lifted its pre-tax profits by almost 23 per cent to £46.8 million (€59.4 million) and earnings per share were up more than 20 per cent to 23.5p. But the main factor behind the market's enthusiastic reaction was the improvement in margins - from 7.3 per cent in first half 1998 to 7.7 per cent in the six months to the end of last June.

Shareholders are being rewarded with a 19 per cent increase in the interim dividend to 2p per share.

Analysts welcomed the Kerry results and particularly the continuing improvement in margins. Current full-year forecasts of around £145 million pre-tax profits and earnings per share of around 55p are likely to be upgraded in the days ahead, underpinning the rise in the share price.

The results for the year which saw sales jump 16 per cent to £903 million included a full six-month contribution from the Dalgety business compared to a three month contribution in 1998 while turnover in the Asia Pacific was boosted by the addition of Burns Philips ingredients business in Australia bought in June 1998. The impact of Dalgety and Burns Philips was offset slightly, however, by the Bakers Aid business in the US and two meat plants in Ireland and the UK that were sold.

Kerry's Irish operations - which take in both consumer foods and food ingredients from the Listowel plant - had a good first half with margins up substantially as operating profits jumped over 11 per cent to £12.9 million on sales up almost 5 per cent to £218.9 million. The European operations, which included the full six month contribution from Dalgety, increased sales by over 18 per cent to £397.7 million.

The American ingredients business put in a very strong performance with operating profits up more than 12 per cent to £27.5 million

even though the growth in sales was just 6 per cent at £240.1 million. The American figures include contributions from Mexico and also from Brazil - one of the areas targeted for strong growth over the next few years.

Kerry has never made any secret of its determination to make a major impact in the Asia-Pacific, and with Burns Philips kicking in for the first time, sales in the region jumped from just £6.5 million to £46.5 million with operating profits up from £400,000 to £1.4 million.

The first half-year figures include an exceptional charge of €8.3 million to cover rationalisation and integration costs in European operations.

A total of £25 million has been set aside to cover this rationalisation programme which includes the establishment of a European development centre in Bristol.

Currency movements affected Kerry's balance sheet by £35.7 million with end-June debt totalling £478.3 million compared to £445.6 million. When the rationalisation charge of £8.3 million and goodwill of £5 million are excluded, interest cover rose from 3.7 times to 3.9 times.