Kerry Group braces for Brexit

by Jeff Gelski
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Brexit
Kerry is well positioned for any issues related to Brexit, including currency challenges, says its chief executive.

TRALEE, IRELAND — The Kerry Group, P.L.C. stands ready to deal with Brexit, said Stan McCarthy, chief executive.

Stan McCarthy, Kerry Group
Stan McCarthy, c.e.o. of The Kerry Group

“We’re very well positioned to be able to deal with the issues that may be presented by Brexit,” he said in an Aug. 4 earnings call. “We broadly have a very strong manufacturing footprint here in the U.K. We have some import, some export. Yes, there may be currency challenges, but from a business perspective, I believe that we’re very well positioned.”

Brexit refers to the United Kingdom voting in June to leave the European Union. Credit Suisse has said the action may lead to a recession in the United Kingdom and higher tariffs across Europe. Mr. McCarthy said a recession is possible, and it may have an impact on consumers, making them become more frugal and less inclined to spend.

“I think that it’s quite possible, but it’s maybe on some more exotic things, whether it’s new cars or whether it’s TVs or vacations or what have you,” he said. “We don’t think that will impact us that much.

“However, our offering is broad enough to know that, even in recessionary times, some of our offerings have done very, very well in the past. We feel pretty okay about the back half of the year. The question mark is how prolonged would it be if there is a recession and what will it do in 2017.”

Brexit might affect the Kerry Group’s international focus.

“International opportunities, we’ll continue to explore and continue to expand and perhaps even now, with what’s happening with Brexit, poses opportunities for us, and we will see how that evolves in the coming months and years,” Mr. McCarthy said.

The Kerry Group held the Aug. 4 call to discuss earnings for the half year ended June 30. Tralee-based Kerry posted EBITDA of €388.5 million ($432.6 million), up 8% from €360.5 million in the first half of 2015. Basic earnings per share fell 6.5% to 126.4c from 135.2c in the same time period of the previous year, which included a credit relating to the gain on the sale of the Pinnacle bakery business in Australia.

Adjusted earnings per share increased 7.5% to 133.8c from 124.5c. Adjusted e.p.s. was defined as before brand-related intangible asset amortization and non-trading items (net of related tax). Revenues of €3,036.6 million ($3,379.3 million) in the first half were up 0.3% from €3,028.1 million.

In its Europe, Middle East and Africa (E.M.E.A.) region, Kerry had revenues of 1,426 million in the first half, down 5% from 1,534.3 million in the same time period of the previous year. 
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