- Earnings dipped in 2020 on the back of lower volumes
- The final dividend has been raised by 10 per cent to 60.6¢ a share
Food and ingredients specialist Kerry (KYGA) saw its revenue dip by 4 per cent in the year to 31 December, to €7bn (£6.1bn), as price increases and acquisitions were unable to offset currency headwinds and lower volumes.
In the ‘taste and nutrition’ business – which accounts for over 80 per cent of total sales – retail volumes increased by 4 per cent thanks to higher demand for nutritional and non-alcoholic beverages. But this was outweighed by a 19 per cent plunge in foodservice volumes amid widespread restaurant closures.
Negative operational leverage and pandemic-related costs therefore pushed Kerry’s operating profit down 12 per cent to €797m. The group kept net debt flat at €1.9bn, and on the back of €412m of free cash flow, the final dividend has been raised by a tenth to 60.6¢ a share.
Looking ahead, Kerry has initiated a strategic review of its dairy business, and Berenberg believes that any resulting asset disposals would boost volume and margin growth in the taste and nutrition division. In the meantime, Kerry’s ingredients solutions leave it well placed to capitalise on consumers’ shift towards more natural and healthier food. Buy.
| KERRY GROUP (KYGA) | ||||
| ORD PRICE: | 10,980¢ | MARKET VALUE: | €19.4bn | |
| TOUCH: | 10,970-10,990¢ | 12-MONTH HIGH: | 12,650¢ | LOW: 8,850¢ |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 35 | |
| NET ASSET VALUE: | 2,635¢* | NET DEBT: | 42% | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2016 | 6.13 | 612 | 303 | 56.0 |
| 2017 | 6.41 | 613 | 334 | 62.7 |
| 2018 | 6.61 | 541 | 305 | 70.2 |
| 2019 | 7.24 | 646 | 320 | 78.6 |
| 2020 | 6.95 | 635 | 313 | 86.5 |
| % change | -4 | -2 | -2 | +10 |
| Ex-div: | 15 Apr | |||
| Payment: | 14 May | |||
| £1=€1.14 *Includes intangible assets of €4.7bn, or 2,653¢ a share | ||||
Last IC View: Buy, €119, 19 Nov 2020
