The ingredients and flavours business remained the engine of the group's growth, with its focus on nutritional solutions and dietary products resonating with rising consumer demands for healthy food. The unit reported a 7.7 per cent increase in like-for-like sales to €3.7bn at a decent 11.9 per cent trading margin, a reflection of its focused investment in food technology.
Perhaps more surprising was the performance of Kerry's consumer foods division, which in recent years has suffered as a result of pressure on household spending in the UK and Ireland. Although fierce competition meant the business wasn't able to fully recover rising input costs, it still generated a decent 3.2 per cent underlying sales increase which kept trading profits steady at €130m.
Broker Goodbody expects EPS of 230¢ in 2012 (from 213¢ last year).
|KERRY GROUP (KYGA)|
|ORD PRICE:||€ 31.43||MARKET VALUE:||€5.52bn|
|TOUCH:||€31.43-31.45||12-MONTH HIGH:||€31.80||LOW: €23.57|
|DIVIDEND YIELD:||1%||PE RATIO:||15|
|NET ASSET VALUE:||1,051¢*||NET DEBT:||70%|
Judicious deal-making, including the $230m acquisition of Cargill's flavours business in December, leaves Kerry well-placed to tap into global food production trends, and the next phase of its Kerryconnect restructuring programme should bring healthy margin improvement. But that's now reflected in a forecast PE ratio of 13.5, leaving the shares a hold.
Last IC view: Good value, 2,661¢, 18 Aug 2011