Group revenue increased by almost 5 percent topping the €3 billion (US$3.5 billion) mark for Irish food giant Kerry in its half year results, but the company’s outgoing chief executive has warned that full-year profits will be lower than expected. The maker of Irish butter, cheese and sausages, has been feeling the impact of adverse currency movements since Brexit which sent sterling tumbling and has left the currency volatile ever since.

Kerry reports its finances in euros but does much of its business in the UK and so makes a lot of its money in sterling.

“Against a background of significant adverse currency movements, we achieved a strong overall business performance in the first half of 2017, outperforming market growth rates and delivering a 7.5 percent increase in adjusted earnings per share,” says Kerry Group Chief Executive Stan McCarthy who is retiring next month and as director of the Group at the end of the year. Edmond Scanlon has been appointed the new CEO.

“In February 2017 we guided growth in adjusted earnings per share of 5 percent to 9 percent at prevailing exchange rates. Taking into account increased currency translation headwinds of 4 percent and a 2 percent improvement in underlying performance at constant currency rates, we now expect to achieve growth in adjusted earnings per share of 3 percent to 7 percent on a reported basis to a range of 333.1 to 346 cent per share (2016: 323.4 cent).”

Highlights
The changing marketplace and consumer consumption trends continued to drive demand for Kerry’s taste & nutrition technologies, according to the Irish food giant.

Group revenue increased by 4.8 percent to €3.2 billion (US$3.75 billion) reflecting 3.8 percent business volume growth, Taste & Nutrition showed 4.2 percent volume growth, while Consumer Foods demonstrated a 2.3 percent volume growth and trading profit increased by 5.2 percent to €338m (US$396m).

Group trading margin maintained at 10.6 percent, Taste & Nutrition +20bps to 13 percent, Consumer Foods -70bps to 7.6 percent and Adjusted EPS up 7.5 percent to 143.8 cent.

Basic EPS of 127.6 cent (H1 2016: 126.4 cent), Interim dividend per share increased by 11.9 percent to 18.8 cent and free cash flow of €357m (US$418m) (H1 2016: €379m (US$444.5m)).

Retail and foodservice channel disruption and expansion, coupled with the growth of e-commerce and demand for convenience plus localized taste preferences benefited Kerry’s unique Taste & Nutrition business model and differentiated consumer-led innovation network.

Increased consumer demand for “better-for-you”, balanced nutrition and health offerings provided a strong platform for growth through Kerry’s market leading clean label solutions across all end-use markets and foodservice channels.

Growth in out-of-home consumption drove strong business development in the foodservice sector.

The Group says that is maintained a strong overall business performance in the first half of 2017 despite significant adverse currency movements and increased raw material pricing.

“Kerry Foods continues to perform well delivering sustained volume growth, despite the uncertainty following the UK electorate’s decision to leave the European Union and the significant devaluation of sterling,” it says.