Kerry profits up 7.1% with the group ‘well positioned’ to deal with Brexit
Kerry Group revenue on a reported basis increased slightly by 0.4% to €6.1 billion and profits increased by 7.1% to €749.6m in 2016, the Group has announced.
The Group published its Preliminary Statement of Results for the year ended December 31, 2016 today.
The slight increase in revenues is as a results of growth in volumes of 3.6%, a decrease in product pricing of 2.1%, and there was a negative transaction related currency impact of 0.3%.
Business acquisitions net of disposals contributed 3.3%, and there was a negative reporting currency impact of 4.1%.
On a reported basis, Group trading profit increased by 7.1% to €749.6m (2015: €700.1m). Group trading profit margin increased 70 basis points (bps) to 12.2%.
Kerry Group’s net debt at the end of the year was €1,323.7m, this compared to net debt of €1,650.1m in 2015, while the Company’s shares traded in the range €61.87 to €84.05 during the year.
In Kerry’s Taste & Nutrition division, reported revenue increased by 3.5% to €4.9 billion, an increase of €0.2 billion on 2015. In Consumer Foods, reported revenue decreased by 9.7% to €1.3 billion (2015: €1.5 billion).
In Ireland, ‘Dairygold’ performed ahead of the market and successfully expanded into the growing butter category with the launch of ‘Dairygold Softer’, the Group announced.
The consumer trend away from traditional health offerings in the spreads category led to a decline in sales through the ‘LowLow’ brand. The ‘Charleville’ brand retained its brand leadership position in the cheese category.
‘Cheestrings’ continued to advance market development across mainland European markets.
‘Denny’ remains the number one meats brand in its core categories in the Irish market, according to the Group. The ‘Denny Fresh Pack’ was successfully launched in September, fulfilling shopper requirements for freshness and convenience. ‘Fire & Smoke’ continued to grow market share in the Irish market.
In 2017, the Group expects to achieve good revenue growth and 5% to 9% growth in adjusted earnings per share to a range of 339.6 to 352.5c/share (2016: 323.4c/share).
Since the UK referendum in June when the electorate voted to leave the European Union, Kerry’s Business Brexit teams have been working through and managing the potential implications for Kerry.
In its results this morning, the Group said that whilst the details of the eventual outcomes are unclear, Kerry has been planning for different scenarios, noting that there will be a number of potential effects, most noticeably on exchange rates, labour costs / availability and tariffs in relation to the movement of goods and services.
Commenting on the results Kerry Group Chief Executive Stan McCarthy said in 2016 Kerry delivered good volume growth and a strong financial performance including sustained business margin expansion, record free cash generation and 7.1% growth in adjusted earnings per share.
“The Group remains confident of its ability to sustain profitable growth throughout global markets. In 2017 we expect to achieve good revenue growth and 5% to 9% growth in adjusted earnings per share.”
Board and Management changes
Meanwhile, the the Board of Kerry has announced that Stan McCarthy, who became Chief Executive of the Group in January 2008, will retire as Chief Executive on September 30, 2017 and as a Director of the Group at year-end.
The Board thanked McCarthy for his leadership as Chief Executive and for his career-long contribution to the growth of the organisation since 1976.
Edmond Scanlon has been appointed Chief Executive Designate to succeed McCarthy on his retirement.
The appointment was overseen by the Board Nomination Committee, chaired by Group Chairman Mr Michael Dowling, and approved by the Board of Directors at its meeting on February 20, 2017.
As previously announced, Michael Ahern, James Devane and John Joseph O’Connor retired from the Board on December 31, 2016.
On February 20, 2017, the Board, on the recommendation of the Nomination Committee, agreed to appoint Gerard Culligan and Con Murphy to the Board with effect from June 1, 2017.