Food group Kerry today reported an increase in profit for H1 2009 despite a fall  in total sales.

Kerry said pre-tax profit before once-off items rose by 5.2% to €136.8m, while trading profit rose by 4% to €180m, despite a 3.2% fall in sales to €2.27 billion.

Profit margins were higher, particularly in its ingredients and flavours business.

Kerry announced an increased its interim dividend by 11.6% to 7.7 cent. Adjusted earnings per share were up 7% to 67.2 cent and the group has said earnings for the full year will be at the upper end of the 160 to 165 cent forecast at the start of the year.

Kerry Group Chief Executive Stan McCarthy commented;“Kerry technologies and brands performed well in the difficult economic environment throughout global markets in the first half of 2009. Good progress was made in aligning product development, innovation, marketing and promotional strategies to the changing marketplace. Our Group trading profit margin increased by 60 basis points, with ingredients & flavours contributing a 60 basis points improvement and consumer foods achieving a 30 basis points margin improvement in a highly competitive market. We expect to maintain the positive margin momentum in the second half of the year and to increase earnings for the full year to the upper end of the range of 160 to 165 cent per share forecast at the start of the year.”

Results detail

Goodbody analyst Liam Igoe commented: "This morning Kerry issued its H109 results, which were broadly in-line with our expectations. Revenue was 2.8% behind our forecast (-4% yoy), however, an improvement in the group operating margin by 60bps resulted in operating profit only being 1.6% behind our expectations (+3% yoy). This coupled with an 8% lower than expected finance charge generated an adjusted EPS of 67.2c (+8% yoy and 2.1% above our forecast). On a divisional basis, the Ingredients business performed better than we had expected, with lfl revenue declining by 1% yoy (compared to our forecast of 2%), driven by volume growth (+1.7% yoy).

The Consumer Foods business was slightly worse than anticipated, with lfl revenue declines of 7.7% (vs. forecast of 6.0%). However, a 30bps margin improvement, due to supply chain improvement, led to profits being flat yoy and 6% above our forecast. In terms of outlook, the company is guiding at the upper end of its 160c-165c range, currently we are forecasting a FY outcome of 162.2c. Given management’s bullish tone in the statement and guidance at the upper end of the range, there is scope for us to marginally increase our forecasts."

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