Kerry Group sign
Kerry Group reported increases of 5.2% in trading profit and 4.8% in revenue for the six-month period ended June 30.

TRALEE, IRELAND — Revenue growth of 6.9% in its Taste & Nutrition business helped Kerry Group P.L.C. to overcome adverse currency impacts in the first half of the fiscal year.

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

“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% increase in adjusted earnings per share,” said Stan McCarthy, chief executive of the Kerry Group.

Tralee-based Kerry Group on Aug. 10 reported increases of 5.2% in trading profit and 4.8% in revenue for the six-month period ended June 30.

Within Taste & Nutrition, trading profit was €330.6 million ($388.5 million), up 8.8% from €303.6 million in the same time period of the previous year. Revenue was €2,543.1 million ($2,988.7 million), up from €2,379.2 million behind 4.2% volume growth.

“Increased 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 food service channels,” Kerry said. “Growth in out-of-home consumption drove strong business development in the food service sector. The group’s developing market strategies and investment again recorded excellent progress in all regions and double-digit volume growth in Asia.”

Within Taste & Nutrition, sales revenue in the Americas region increased 7.6% to €1,339 million ($1,574 million) behind 3.6% volume growth, a 1.5% increase in net pricing and a favorable currency impact of 2.5%.

Taste technologies performed strongly throughout the American markets, particularly in the meat, bakery and beverage categories. Smoke and grill technologies benefited from the Red Arrow acquisition completed in 2015. Beverage systems grew through ready-to-drink coffee and smoothie applications.

Market conditions in North America for prepared meals and side dish categories challenged dairy and culinary systems. A decline in the ready-to-eat cereals sector challenged cereal systems, but snacking trends provided growth opportunities in nutrition bars in North America.

Also within Taste & Nutrition, sales revenue in Europe, Middle East and Africa increased by 2.3% to €750 million as business volume growth and a net pricing increase offset adverse currency impacts. Taste & Nutrition sales revenue in the Asia-Pacific region grew 14% to €419 million. Volumes grew by 10%, and net pricing increased by 1.7%.

Within Kerry’s Consumer Foods, trading profit was €51.3 million, down 11% from €57.5 million in the previous year’s first half. Revenue dropped 2.8% to €677 million from €696.7 million.

The Kerry Group overall reported trading profit of €338.4 million, up from €321.6 million in the first half of the previous fiscal year. Basic earnings per share were €1.27.6, up 0.9% from €1.26.4. Adjusted e.p.s. was €1.43.8, up 7.5% from €1.33.8. Group revenue increased to €3,181.3 million from €3,036.6 million.

The Kerry Group previously forecast fiscal-year growth of 5% to 9% in adjusted earnings per share, but the company lowered expectations when releasing first-half results.

“Taking into account increased currency translation headwinds of 4% and a 2% improvement in underlying performance at constant currency rates, we now expect to achieve growth in adjusted earnings per share of 3% to 7% on a reported basis to a range of (€3.33 to €3.46) per share,” Mr. McCarthy said.

New York-based Vertical Group on Aug. 10 said it would keep its Kerry Group rating at “hold,” saying the company’s lowered earnings guidance was due entirely to the adverse currency effects.

“We like Kerry’s positioning within the global ingredients landscape, and we would point out that its Consumer Foods business is handling a changing consumer environment well,” the report written by Brett Hundley and Brandon Groeger said.

The Vertical Group estimated adjusted e.p.s. of 3.41 for Kerry in the fiscal year.