Ingredients and flavours drive double-digit development for Kerry

26-Feb-2013 - Last updated on 26-Feb-2013 at 13:11 GMT

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Irish food and ingredients giant Kerry Group has reported a 10.8% increase in operating profit for the year of 2012 on the back of strong growth driven by its ingredients and flavours arm.

The growth, which also sees total revenue up by 10.3% to €5.8 billion, is in line with the firm’s expectations, Kerry said.

The Irish ingredients company revealed a jump in operating profit to €54.7m, while adjusted earnings per share (EPS) grew 11.3% to 237.6 cent.

Such growth has come on the back of successful growth in the firm’s ingredients and flavours business which witnessed a 14% increase in business – translating to a 15.1% jump in operating profit for the business unit (up to €506 million)

Flavour and ingredients growth

The group said its ingredients and flavours business continued to perform well and has benefitted from “creative and speedy innovation” that has helped to lift revenues €4.2 billion.

The Irish ingredients supplier revealed a 40.7% increase in its Beverage systems arm of the business unit, while Cereal & Sweet systems revenue grew by 18.5%. Growth in its Pharma, Nutritional and Functional ingredients arm was at a solid 11.5%, while Savoury & Diary systems grew by 9.3%.

“Despite challenging market conditions in some consumer food and beverage categories, in particular in relatively mature developed market sectors, demand for new product development remained strong – driven by consumer health and wellness trends towards ‘clean label’, high fibre, ‘heart healthy’, reduced calorie, enhanced nutritional and dietary products – in addition to ongoing demand for convenient delivery systems, hand-held or snackable products, cost effective solutions and affordable indulgence,” said Kerry.

Meanwhile, Kerry said that a competitive consumer environment has seen its consumer foods business lag, with sales and profit up 2.3% and 0.1% respectively.

Forecast

Kerry Group chief executive Stan McCarthy commented that the firm’s said restructuring programme will allow growth to remain steady throughout 2013, despite a stronger euro and higher raw material costs squeezing margins in the first two months of the year.

“We continue to invest in our technologies, innovation and nutritional expertise, and also in expanding our footprint throughout developing markets,” said McCarthy.

“In 2013 we expect to achieve 7 per cent to 11 per cent growth in adjusted earnings per share.”

Looking to 2013, the group also said it expects that opportunities for its “technologies, applications, culinary expertise and processing capabilities” indicate well for the future growth of the businesses.

“Our investment in strategically located, industry-leading Kerry Global Technology & Innovation Centres will provide access to the group's entire technological base and expertise - further strengthening our strategic customer alliances,” said Kerry. “We are firmly focused on expanding our footprint throughout regional developing markets.”