Irish food company Kerry Group Plc said earnings rose in the first half of the year as it passed on sharp rises in food commodity costs and withstood the impact of weaker UK and Irish economies and sterling. Kerry, whose brands include Wall's sausages, Homepride flour and Cheesestrings snacks, said the second half would be challenging but it remained confident it could meet its full-year earnings forecast.
"Our business model is well equipped to deal with this sort of an environment," Chief Financial Officer Brian Mehigan said. Adjusted earnings per share (EPS) for the six months to the end of June rose to 62.8 cents from 58.8 cents a year earlier. That compared with the 62.3 cents forecast by Davy, stockbrokers to Kerry Group. Basic EPS grew 4.3 percent to 60.1 cents.
Kerry reaffirmed it expected full year earnings of 151 to 155 cents per share, guidance first given in February. Kerry has managed to pass on big rises in the cost of raw materials to customers and used the breadth of its product range to maintain sales as consumers trade down from premium categories, Mehigan told Reuters.
"The second half will be a challenge, but as we said we are confident we can hit the numbers," Mehigan said in a phone interview. Passing on cost rises of up to 300 percent has been taking longer however, in Kerry's chilled meals business, and it has also experienced weaker demand for dairy products, especially yoghurt, Chief Executive Stan McCarthy told a press conference.
Kerry, which makes much of its money supplying ingredients and seasonings to other food makers, posted sales of 2.36 billion euros ($3.47 billion) in the first half, with revenue growth of 7.3 percent on a like-for-like basis. "The robustness of the business is seen in the like-for-like comparison," said Davy analyst John O'Reilly, adding that he would keep his full-year EPS forecast of 152.3 cents.
Kerry said it would look for acquisitions across all of its divisions, with about 250 million euros per year of its own cash plus some other funds to spend on it. "Our (acquisitions) pipeline is several times larger than that," McCarthy told reporters.
Kerry shares traded 2.2 percent higher by 1139 GMT at 19.42 euros, outperforming a 1.1 percent stronger Irish market. "The results represent a very solid performance in what has been a very challenging half year on a number of fronts," said Paul Meade, analyst at NCB Stockbrokers.
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