Feb 24 - Kerry, the global ingredients & flavours and consumer foods group, reports preliminary results for year ended 31 December 2008.
Highlights
Solid business development and organic growth in all territories
• 6.3% like-for-like (LFL) sales revenue growth to €4.8 billion
• 8% (LFL) increase in trading profit to €409m
• 10 basis points increase in trading profit margin to 8.5%
• Adjusted EPS* up 7% to 153.9 cent
• Final dividend per share up 12.2% to 15.6 cent
• Free cash flow of €227m
• R&D investment increased to €147.5m
*before intangible amortisation and non-trading items
Commenting on the results Kerry Group Chief Executive Stan McCarthy said; “I am pleased to present a good set of results for 2008. Despite tremendous cost pressures and trends towards more value conscious food and beverage consumption – particularly in the second half of the year, we achieved good organic revenue growth and margin improvement. Kerry is well positioned from a technology and consumer understanding standpoint to lead industry product development needs in this time of change. In addition the Group is well resourced financially to benefit from the business expansion opportunities which will inevitably emerge. We are confident of delivering earnings growth in 2009 to a range of 160 to 165 cent per share”.
CHAIRMAN’S STATEMENT
For the year ended 31 December 2008
Kerry’s strategic development initiatives and innovation capabilities assisted achievement of a strong Group-wide business operational and financial performance in 2008. Despite significant additional cost and currency pressures, Kerry businesses recorded good organic revenue growth and margin improvement. Solid business development and expansion was achieved in Year 1 roll-out of Kerry’s ‘goto- market’ programme. This customer-focused integrated development strategy, capitalising on the Group’s broad based ingredients and flavours technologies and end-use-market application’s expertise, produced excellent results in many key customer accounts.
As economic activity in major consumer markets progressively weakened during 2008, food and beverage consumption trends shifted in response to the needs of budget conscious consumers. Growth through retail channels exceeded foodservice growth where sales declined in some market segments, in particular in full-serve restaurants. Against this challenging background, combining Kerry’s ingredients & flavours technologies and applications expertise assisted food and beverage companies in rapidly responding to consumer requirements. Despite the added difficulties posed by the significant depreciation of the sterling/euro exchange rate, Kerry’s consumer foods businesses in the UK and Irish markets also performed well in the changing consumer environment. The Group’s performance in 2008 also benefited from the strategic investments undertaken over recent years and the on-going programmes targeted at maximising efficiencies and synergies across all Kerry businesses.
RESULTS
Group sales revenue in 2008 at €4.8 billion reflects an increase of 6.3% on a like-for-like (LFL) basis when account is taken of currency translation, acquisitions and business disposals. Despite the adverse impact of a further 7% increase in raw material and energy related input costs, trading profit increased to €409m, reflecting an 8% increase on a like-for-like basis. The Group’s on-going focus on operational efficiencies and cost recovery programmes contributed to the 10 basis points improvement in the Group trading profit margin to 8.5%. Ingredients & Flavours businesses delivered a 10 basis points increase in trading margin to 9.5% and margins in consumer foods advanced by 10 basis points to 6.7%. This performance also reflects the benefits of Kerry’s capital investment programmes in recent years. The net cost of the Group’s capital expenditure programme in 2008 amounted to €145m (2007: €89m).
Profit before tax and non-trading items increased by 2.3% to €317m. Profit after tax before intangible asset amortisation and non-trading items increased by 4.4% to €269m. Adjusted earnings per share increased by 7% to 153.9 cent. Basic earnings per share decreased to 101.3 cent per share.
At the Annual General Meeting to be held in Tralee on 12 May, the Board will recommend a final dividend of 15.6 cent – an increase of 12.2% on the prior year final dividend. This will bring the total dividend for the year to 22.5 cent per share, an increase of 12.5% on the total 2007 dividend.