Kerry Group's 2009 Pre-Tax Profits Up 6% with Strong Ingredients Performance

The Group’s ingredients & flavours businesses achieved 2.9% underlying volume growth in 2009 but elimination of non-core activities associated with the business restructuring programme -3.3% and 4.2% lower pricing due to favourable raw material costs meant that sales revenue declined by 4.5% (LFL) to €3,261m.

23 Feb 2010 --- Kerry, the global ingredients & flavours and consumer foods group, has reported preliminary results for year ended 31 December 2009. Sales revenue of €4.5 billion was reported with a 2.2% increase in continuing business volumes and a 3.8% (LFL) increase in trading profit to €422m. Ingredients & Flavours trading margin was up 90 basis points to 10.4%.

Commenting on the results Kerry Group Chief Executive Stan McCarthy said; “The Kerry business model performed robustly in what was a challenging environment in 2009 – delivering excellent product and business development opportunities, good margin improvement and cash generation. Our Group trading profit margin increased by 80 basis points to 9.3%, with ingredients & flavours contributing a 90 basis points improvement and consumer foods achieving a 40 basis points margin improvement. Our strategies and investment programmes will enable sustained business margin improvement and we are confident of delivering earnings growth in 2010 to a range of 182 to 185 cent per share (2009:166.5 cent)”.

Group sales revenue in 2009 reported at €4.5 billion reflects a 4.8% reduction on a like-for-like (LFL) basis. However; allowing for elimination of non-core activities as a result of the ‘go-to-market’ and business restructuring programmes, improvements to product mix, lower pricing and trading currency movements; continuing business volumes were 2.2% ahead on a Group-wide basis. Continuing business volumes improved by 2.9% in ingredients & flavours and recovered in consumer foods as the year progressed to equal the 2008 level. Business restructuring in the Group’s ingredients & flavours regional businesses was completed by year-end and was well advanced in the consumer foods division.

Trading profit increased to €422m, reflecting a 3.8% (LFL) increase and 80 basis points improvement in the Group trading profit margin to 9.3%. Ingredients & flavours achieved a 90 basis points improvement in trading profit margin to 10.4% and margins in consumer foods, driven by business efficiency programmes, increased by 40 basis points to 7.1%.

Profit before tax and non-trading items increased by 6% to €335.8m. Profit after tax before intangible asset amortisation and non-trading items increased by 8.4% to €291m. Adjusted earnings per share increased by 8.2% to 166.5 cent. Basic earnings per share increased from 101.3 cent to 115 cent. The Board recommends a final dividend of 17.3 cent per share, an increase of 10.9% on the 2008 final dividend. This brings the total dividend for the year to 25 cent per share, an increase of 11.1% on the previous year.

The Group’s ingredients & flavours businesses achieved 2.9% underlying volume growth in 2009 but elimination of non-core activities associated with the business restructuring programme -3.3% and 4.2% lower pricing due to favourable raw material costs meant that sales revenue declined by 4.5% (LFL) to €3,261m. Primary dairy, edible oils and wheat raw material costs were significantly below the prior year level. Trading profit grew by 4.9% (LFL) to €340m contributing a 90 basis points improvement in trading profit margin to 10.4%.

2009 represented the first full year’s engagement in the Group’s ingredients & flavours ‘go-to-market’ programme in the Americas region. Results in terms of business performance, efficiencies, speed of product development and customer satisfaction were most encouraging despite the relatively weaker market conditions in some end-use-markets. Similarly results to-date in the EMEA and Asia-Pacific regions also confirm the benefits of Kerry’s new business model and integrated approach in leading product developments for food and beverage providers. Despite some trading down from premium offerings to more value driven or budget lines, provenance and authenticity of ingredients, convenience as well as health and satiety control have assumed more importance. This has contributed to continued momentum towards clean label declaration and increased demand for Kerry’s all-natural, nutritional or functional ingredients & flavour systems – including calorie reduction, sodium reduction, fibre fortification and taste modulation technologies.