Stan McCarthy, Kerry Group
Stan McCarthy, c.e.o. of Kerry Group, said it has been a “record year” for acquisitions.

TRALEE, IRELAND — Six acquisitions made in 2015 are boosting results in 2016 for the Americas Region of Kerry Group, P.L.C.

For the half year ended June 30, the Americas Region posted sales revenues of 1,243.8 million ($1,384.9 million), an increase of 15.2% from 1,079.7 million in the same time period of the previous year. Business volume grew by 3.5% while pricing was lowered by 2%.

Red Arrow Products, acquired last December, recorded growth in the meat and savory products sector, particularly in North America, according to Kerry Group. KFI Savory, acquired from Kraft Foods last year, assisted the performance of Kerry’s culinary taste and systems in the North American prepared meals sector.

Also in American markets, the bakery sector saw opportunities for growth through “clean label” preservation systems and extended shelf life products developed by Kerry’s fermentation technologies.

Kerry’s beverage taste and systems segment recorded growth throughout the Americas region due to the acquisitions of Island Oasis and Insight Beverages, both of which performed well in the food service and convenience channels.

Growth in the pharmaceutical sector was assisted by the acquisition of the Wellmune branded natural food, beverage and supplement immune-enhancing ingredients business. Baltimore Spice, based in Costa Rica, assisted development in Latin America.

Stan McCarthy, chief executive of Tralee-based Kerry Group, called it a “record year” for acquisitions in an Aug. 4 earnings call.

“They are performing quite well with wider international opportunities for those acquisitions, particularly in food service and around taste and nutrition,” he said.

Mr. McCarthy added Kerry normally has a higher level of capital expenditure at this time of year, but the integration of the new acquisitions held it up a little.

“We expect (capital expenditure) to pick up in the back half of the year and next year, but it will be very much around taste, which will incorporate, obviously, some of those acquisitions,” he said.

Overall, Kerry Group, P.L.C. 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 in the first half were up 0.3% from 3,028.1 million.

Volume growth of 3.2% reflected a strong performance in the American markets, lower volume growth in Europe, Middle East and Asia (EMEA), and business growth in Asia. Net pricing was 2.2% lower against a background of about 4% lower raw material costs. Currency headwinds relative to the first half of the previous year contributed an adverse 3.7% translation impact relative to revenue.

Kerry expects growth for the full year in adjusted earnings per share to be toward the middle to lower end of the range of 6% to 10%, or 320c to 332c per share. The expectation takes into account increased currency headwinds of 5% at current exchange rates.

“This consistent financial performance has been achieved in quite a volatile and changing environment, not least at consumer level where we see significant change and disruption coming through from consumer level, whether it is taste or nutrition, or health and wellness, or customization, or individualization, or the internet, etc., or people changing their shopping habits,” said Brian Mehigan, chief financial officer of Kerry Group, in the Aug. 4 call. “There is a huge change going on in the consumer set that we serve across the world today.”

In Kerry’s Taste and Nutrition business, trading profit of €303.8 million in the first half of the year was up 7.9% from 281.5 million. Revenues of €2,379.2 million were up 2.6% from 2,317.8 million. Business volume grew 3.5% while pricing was lowered by 2.2%.

“Our trading margin on our Taste and Nutrition business is now 12.8%, volume growth continuing to outperform the marketplace, which we’re very pleased with,” Mr. McCarthy said. “The localized taste preferences and enhanced nutrition driving product innovation, we have called out that in the past, and it will continue to drive innovation into the future with the change that is taking place.”

In Kerry’s consumer foods business, trading profit of €57.7 million in the first half was down 4% from €59.9 million. Revenues decreased 7% to €696.7 million from €749.3 million, which was attributed primarily to the disposal of non-core businesses net of acquisitions in 2015 and adverse currency movements relative to the first half of the previous year. Business volume grew by 2.5% while pricing was reduced by 2.3%.