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Healthy results for Kerry

31-Aug-2004

Ongoing demand for healthy products helped Irish food and ingredients firm Kerry to a strong first half performance. And with recent acquisitions pushing it into other high growth sectors, there is little to stop the group from making further advances in the second half.

Kerry reported first half sales of €1.96 billion, an 8.5 per cent increase on the previous year, although this included some €73.2 million in revenue from acquisitions. Nonetheless, organic growth was 4 per cent, helped by the continued efforts of the group to strengthen its position in the functional health and wellness category.

Kerry's experience in the dairy sector has helped it carve a significant niche for itself in one of the fastest-growing functional ingredient sectors, dairy proteins - the company already supplies ingredients for premium ice cream and yoghurts, as well as nutritional foods and infant formulas.

But Kerry's involvement in the healthy food market is not restricted to ingredients: the company has also revitalised its fortunes in the convenience food market by rolling out new products with functional, high protein or low-carbohydrate qualities, reacting rapidly to changes in consumer demand. The company's Dawn Omega Milk - fresh milk with a high omega-3 fatty acid levels - is just one example.

Health has also played a major role in driving sales at the prepared fruit business, increasingly focused on functional ingredients for the confectionery industry. Indeed, Kerry is keen to maximise its potential in this area and has created new cross-divisional business development teams to look at opportunities in the functional bar and sports/lifestyle nutrition markets.

In the US, it is the low-carb fad which has benefited the company the most, with the group's Nutriant unit producing a range of soy isolate and soy protein products to capitalise on demand for low-carbohydrate foods.

Flavours, the other major revenue stream for Kerry, also benefited from changing consumer demands, this time for high quality natural flavourings. Both the European and North American Mastertaste units increased sales to the beverage sector in particular as a result of this trend.

Food coatings, meanwhile, had a tougher time, with poor weather in some European countries impacting the barbecue seasonings business and the health trend have a wide-ranging impact on snack foods, another major customer for this division. US food coatings were affected by high raw material costs, partially offset by price increases and efficiency gains.

With increasing overlaps between its major business operations, Kerry has been busy consolidating its position through acquisitions, most notably of the Quest Food Ingredients business from ICI earlier in the half which will give the Irish firm a strong foothold in bio- an pharma-ingredients, offering further opportunities for developments in health and functional foods.

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