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Kerry Foods benefits from demand for healthy products

Demand for organic, gluten free, and vegetarian products was good news for the Irish company's taste and nutrition business
August 11, 2017

Changing consumer tastes present a challenge for food producers, but Kerry (KYGA) is helping those companies meet the demands of picky eaters. The trend towards healthier, more natural options contributed to a 4.2 per cent increase in volumes in the in the taste and nutrition business in the first half, boosting reported revenue in this division by 6.9 per cent to €2.5bn (£2.27bn). This was driven primarily by the Americans region, where demand for organic, gluten free, and vegetarian options saw sales improve by 7.6 per cent to €1.3bn.

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Rising inflation and more competition from discount chains in the UK made this market more challenging for the chilled foods business. But a decision to hike prices by 1.9 per cent, helped by a 2.3 per cent improvement in volumes, managed to offset unfavourable exchange rates (evident in the 2.8 per cent dip in reported revenue) and keep trading profit margin steady at 10.6 per cent.

Prior to these results, analysts at Liberum expected EPS of 338ȼ for the year ending December 2017, compared with 322ȼ in 2016.

KERRY GROUP (KYGA)   
ORD PRICE:7,740ȼMARKET VALUE:€13.6bn
TOUCH:7,714-7,728ȼ12-MONTH HIGH:8,156ȼLOW: 6,106ȼ
DIVIDEND YIELD:0.7%PE RATIO:25
NET ASSET VALUE:1,846ȼ*NET DEBT:38%
Half-year to 30 JuneTurnover (€bn)Pre-tax profit (€m)Earnings per share (ȼ)Dividend per share (ȼ)
20163.0425612616.8
20173.1825712818.8
% change+5-+1+12
Ex-div:12 Oct   
Payment:10 Nov   
*Includes intangible assets of €3.45bn, or 1,962ȼ a share  £1=€1.11