Kerry Reports Strong Growth, McCarthy to Retire as CEO
21 Feb 2017 --- The CEO of Kerry Group has announced he is stepping down just at the company releases its preliminary results for last year which reveal a slight climb in revenue to €6.1billion (US$6.4billion). After nine years as CEO, Stan McCarthy, will retire as chief executive in September and as a director of the Group by the end of the year.
Taking over as chief executive designate will be Edmond Scanlon who is currently president and CEO Kerry Asia Pacific.
According to Kerry, the Group achieved good business volume growth momentum in a competitive market environment and delivered a strong financial performance including record cash generation in 2016.
Despite currency instability and increased volatility, the Group responded well, while health and wellness trends continued to drive ‘nutritionally minded’ consumer choice, increasing demand for taste, active nutrition, higher protein, natural, ‘free-from’, authentic, clean-label, convenient food and beverage products.
Kerry’s unique combined Taste & Nutrition Technologies and Systems were to the fore in meeting customers’ innovation needs for customized solutions responding to consumer requirements.
The Group’s recent investments in its global, regional and in-market Technology & Innovation Centre network and Commercial/Application facilities, coupled with a significant increase in RD&A expenditure in Taste & Nutrition to 5.1% of divisional revenue in 2016, contributed to increased customer engagement and innovation activity, it says.
Performance was also assisted by businesses acquired in 2015 which provided a strong platform for international market development. During the year the Group completed two bolt-on acquisitions, establishing manufacturing bases in two new locations; Jungjin Foods was acquired in South Korea and Vendin S.L. was acquired in Spain.
While many developing markets were impacted by continuing geopolitical issues and significant currency volatility, Kerry says it continued to satisfactorily progress market development in all regions and recorded excellent growth in Asia - particularly in Q4.
Groupwide performance in Q4 reflected good business development momentum against a previously strong year.
Commenting on the results Kerry Group Chief Executive Stan McCarthy said: “In 2016 Kerry delivered good volume growth and a strong financial performance including sustained business margin expansion, record free cash generation and 7.1% growth in adjusted earnings per share. The Group remains confident of its ability to sustain profitable growth throughout global markets. In 2017 we expect to achieve good revenue growth and 5% to 9% growth in adjusted earnings per share.”
Business Performance
Taste & Nutrition achieved 4% growth in business volumes and pricing was 2.1% lower. Kerry Foods’ business volumes increased by 2.1% and pricing reduced by 2%. The Group trading margin increased by 70 basis points to 12.2%.
Kerry says that this reflects a 60 basis points improvement in trading margin in Taste & Nutrition, a 30 basis points improvement in Kerry Foods’ margin and reduced spending on the Kerryconnect program.
Basic earnings per share increased by 1.4% to 302.9 cent. Adjusted earnings per share increased by 7.1% to 323.4 cent (2015: 301.9 cent). The Board recommends a final dividend of 39.2 cent per share, an increase of 12% on the final 2015 dividend. Together with the interim dividend of 16.8 cent per share, this brings the total dividend for the year to 56 cent, an increase of 12% on 2015.
Expenditure on research and development increased significantly due to increased investment in Taste & Nutrition to €261 million (2015: €234 million). Net capital expenditure amounted to €210 million (2015: €229 million). The Group achieved a record free cash flow of €570 million (2015: €453 million).
Speaking on Irish radio earlier today, McCarthy said Kerry is working on its five-year plan going forwards and this was “appropriate time for a change.”
Kerry says it remains confident to continually grow and develop in the changing global marketplace with its customer-focused business model.
In 2017, the Group expects to achieve good revenue growth and 5% to 9% growth in adjusted earnings per share to a range of 339.6 to 352.5 cent per share (2016: 323.4 cent per share).
