Kerry steps up Eastern European presence in Dera deal

By Sarah Hills

- Last updated on GMT

Related tags Kerry Europe Eastern europe

Kerry has agreed to the acquisition of the savoury flavourings business Dera Holding NV in order to pursue its drive into markets in Eastern Europe and the Middle East.

The deal with Dera, which is awaiting regulatory approval, is one of three acquisitions worth €98m in total as Kerry has also agreed to acquire the Costa Rican-based savoury ingredients and flavours firm, Prima SA, and the UK-based cooked pastry products business, G Adams Pastry.

Frank Hayes, Kerry director of corporate affairs, told that by acquiring Dera, the company is extending its geographical reach.

“It is strategic in terms of extending our savoury ingredients and flavours business into Eastern Europe and we are also developing a position in Middle Eastern markets,” ​said Hayes.

Although Kerry has been developing a market presence in those regions, it has had no facilities to continue to grow its presence there.

“We have operations and manufacturing and R&D facilities in main land European markets but this [acquisition] is a significant boost to serve the growing regions in Eastern Europe.

“Dera has strong customer relations in the region and it has a more established presence there then we have.”

Dera has manufacturing facilities in Belgium, the UK and Czech Republic, serving meat, processed foods, bakery and confectionery end-use markets in Europe and the Middle East.

Kerry serves the food and beverage industry with food ingredients and flavours and it also supplies added value brands and customer branded foods to the Irish and UK markets.

Hayes said that Kerry is currently waiting for some formalities to be concluded before the acquisition can close, including regulatory approval in some Eastern European countries.

Prima is said to provide a platform for growth in the Central American food processing and meat industries, which G Adams Pastry is expected to strengthen Kerry Foods’ manufacturing capability in the UK pastry market.

Profit drop

The announcement came as Kerry Group revealed its preliminary statement of results for 2008 which showed a 28 per cent drop in profits after tax from €246m in 2007 to €177m in 2008.

Like-for-like (LFL), sales revenue grew 6.3 per cent to €4.8bn and there was an eight per cent LFL increase in trading profit to €409m.

Ingredients & Flavours division

In total, ingredients and flavours sales revenue in 2008 increased by 7.5 per cent (LFL) to €3,388m and trading profits increased by 8.9 per cent (LFL) to €320m.

The company said it performed well across food and beverage end-use markets in all territories. Looking a Europe in particular, Kerry said its strong focus on business efficiencies and cost recovery meant trading profit margins were maintained, despite significant raw material and energy related costs inflation.

Consumer Foods division

Sales revenue in the consumer foods arm increased by 5.4 per cent (LFL) to €1,774m and trading profit was €120m, a 5.1 per cent (LFL) increase.

According to Kerry, the weakening economic landscape and the significant depreciation of the sterling/euro exchange rate made trading conditions in the UK and Irish consumer foods markets increasingly challenging. However the company said its positioning in chilled foods growth categories and the division’s ability to respond quickly to consumer trends contributed to a “satisfactory business performance”​.

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