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Kerry Records Nearly 7% Sales Revenue Growth for 2011

Posted: February 21, 2012

Kerry reported its preliminary results for the year ending Dec. 31, 2011. Highlights for the company included at 6.9% increase in sales revenue (+6.4% like-for-like) to €5.3 billion and a 3.3% increase in business volumes. The company also noted its trading profit reached the €501 million level, and adjusted EPS was up 11.1%. Final dividend per share was 22.4 cents (total 2011 dividend up 11.8% to 32.2 cents), free cash flow was €279 million (a drop from 2010’s €305 million), and the company also invested €167 million in R&D in 2011.

Commenting on the results, Kerry CEO Stan McCarthy said, “Kerry delivered good profitable growth in 2011 despite weak consumer confidence in many markets and significant raw material and input cost inflation. The group performed well across developed and developing markets while continuing to build our capabilities and positioning for the future. Trading profit reached a milestone level of €501 million in 2011. We are confident of achieving our strategic growth objectives for 2012 and expect to achieve 7–10% growth in adjusted earnings per share to a range of 228 to 235 cents per share (2011: 213.4 cents).”

In the chairman’s statement, the company noted good organic growth rates were achieved despite the inflationary environment, and raw material costs increased by over 8% year-on-year, requiring close collaboration with customers to manage cost recovery programs. The group’s ingredients and flavors businesses grew steadily in all regions benefiting from Kerry’s breadth and depth of technology and “1 Kerry” approach to market development providing industry-leading integrated solutions. While consumer spending remains constrained due to fiscal pressures, demands for all-natural and clean label solutions continue to grow as does the requirement for healthy reformulation, well-being and diet-specific offerings. Cost recovery in the group’s consumer foods markets in Ireland and the UK proved more challenging due to the prevailing economic situation and level of price promotional activity in both markets. However, while Kerry Foods saw a moderation in volume growth as the year progressed, profitability in the division was maintained due to on-going business efficiency programs and successful innovation focused on value consumer offerings.

Fourth quarter sales volumes in ingredients and flavors reflected good growth against a strong comparative in 2010. Over the full year the ingredients and flavors’ business volumes increased by 4% and achieved 10 basis points margin improvement to 11.9%.

Also specifically for the company’s ingredients and flavors division, revenue was €3,706 million, a like-for-like increase of 7.7% over 2010/ Kerry’s go-to-market strategies, capitalizing on its broad global ingredients and flavors development, technology layering opportunities and end-use-market focus continued to deliver stronger customer engagement and innovation in all regions in 2011. Business volumes grew by 4% and pricing/mix increased by 3.8%. Trading profit increased by 9.4% like-for-like to €439 million with the division’s trading margin improved by 10 basis points to 11.9%. Innovation continues to be driven by increasing consumer demand for “free-from” foods, reduced calorie, reduced salt, reduced fat, higher fiber, natural flavors and ingredients, enhanced nutritional and dietary products, in addition to continuing trends toward more convenient, cost-effective solutions, healthy snacking options and affordable indulgence; flavoring development through Kerry’s range of ingredients, flavors, texture, nutritional and taste solutions.

All group technology clusters achieved satisfactory growth in 2011. Revenue grew by 7.9% in savory and dairy systems; 5.4% in cereal and sweet systems; 12.6% in beverage systems; 9.1% in pharma, nutritional and functional ingredients; and by 11.2% in regional technologies.

Revenue in the Americas region grew by 7.1% like-for-like to €1,558 million. Business volumes increased by 3.3% and pricing/mix increased by 3.8%, while revenue in the EMEA region increased by 6.9% like-for-like to €1,475 million. Business volumes in EMEA grew by 2.7% and while there was some lag in cost recovery, the increase in input costs was substantially recovered with pricing/mix increased by 4.2%. Revenue in the Asia-Pacific region grew by 12% like-for-like to €605 million, and the region’s business volumes increased by 10% despite a series of natural disasters. Pricing/mix increased by 2.8%.

More information on this report is available here.

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