Food group Kerry today reported pre-tax profits of €240m for the year ending December 2008, down from the figure of €298m in 2007. Profit before tax and non-trading items increased by 2.3% to €317m. Profit after tax before intangible asset amortisation and non-trading items increased by 4.4% to €269m. Adjusted earnings per share increased by 7% to 153.9 cent. Basic earnings per share decreased to 101.3 cent per share.
The company posted a 7% rise in earnings and said it expected more growth this year despite consumers becoming more budget conscious.
Like for like sales revenues rose by 6.3% to €4.8 billion despite 'the tremendous cost pressures and trends towards more value conscious food and beverage consumption'.
The company said that it is recommending a final dividend of 15.6 cent per share, up 12.2% on 2007. Along with the interim dividend of 6.9 cent per share, this raises the total dividend for the year to 22.5 cent per share, up 12.5% on the total 2007 dividend.
Commenting on the results Kerry Group Chief Executive Stan McCarthy said: “I am pleased to present a good set of results for 2008. Despite tremendous cost pressures and trends towards more value conscious food and beverage consumption – particularly in the second half of the year, we achieved good organic revenue growth and margin improvement. Kerry is well positioned from a technology and consumer understanding standpoint to lead industry product development needs in this time of change.
In addition the Group is well resourced financially to benefit from the business expansion opportunities which will inevitably emerge. We are confident of delivering earnings growth in 2009 to a range of 160 to 165 cent per share”.
Results detail
Goodbody analyst Liam Igoe commented: "For the year ending December 2008, Kerry Group reported EPS of 153.6c (fully-diluted), representing annual growth of 7.1%. Within Ingredients full-year like-for-like sales growth of 7.5% was attained (this follows lfl growth of c.6% in Q308 and 7.8% in H108), while in Kerry Foods the respective lfl growth rates were 5.4% (4% in Q308 and 6% in H108). The company’s balance sheet is in good shape and remains one of the strongest in the sector, with net debt of €1.16bn representing debt/EBITDA (FY08) of 2.3x (compared to a sector average of 3.5x) and an interest cover of 5.3x. Kerry has renegotiated its debt facilities and has no debt repayments for the next two years. Kerry Ingredients’ solid performance against the economic backdrop is due to its geographic and product diversity.
While some parts of its Ingredients operations have seen a slowdown - such as the North American ready-to-eat cereal sectors and European dairy sector - solid growth has continued to be recorded elsewhere. Lfl revenue growth of 7.5% for the year (6% in Q308 and 7.8% in H108) is higher that levels achieved by its Ingredient peers (average of 6%). Kerry Foods has had to contend with the full impact of weaker currencies in 2008, which impacted reported sales. While net sales were flat, underlying volume growth in the Group was 3.5% (+4% in Ingredients and +3% in Foods) with price increases accounting for another 3.5%. Geographically, North America was again the strongest driver of growth within the Group, with lfl sales up 6.7%, versus 4% for Europe.
The Far East, though a smaller region, continued to exhibit stronger growth at 19.3%. Again theses figures demonstrate the relative out performance of Kerry compared to its peers. For example, IFF only managed to achieve lfl sales growth of 6% in the US, 2% in EMEA and 10% in Asia, while Givaudan and McCormick performed similarly. In terms of the outlook, the company has guided an EPS range for 2009 of 160c - 165c, which compared with our forecast of 162.2c. At first glance we do not expect to make any material changes to our forecasts."
