Kerry sees underlying growth in 2013

Kerry sees underlying growth in 2013

Kerry Group has booked a drop in net earnings for 2013 despite posting a near 10% increase in trading profit.

In the 12 months to end-December, net profit plummeted to EUR84.4m (US$116m), compared to EUR260.7m in 2012. The bottom line was hit by a number of "trading items", which reduced net profit by EUR352.2m. These one-time costs included costs related to Kerry's acquisition and restructuring programme, integration costs and supply chain costs.

The company did, however, grow trading profit from EUR559m in 2012 to EUR611.4m. The Irish consumer foods and ingredients business said that operating profit was boosted by a reduction in costs and a focus on value added products that generate higher returns.

Kerry has targeted higher revenue in the growth areas of "targeted nutrition, taste and developing market platforms", chief executive Stan McCarthy commented. Total sales were down 0.2% to EUR5.83bn from EUR5.84bn but organic sales were up 4.6%.

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Preliminary Statement of Results

for the year ended 31 December 2013

 

Kerry, the global ingredients & flavours and consumer foods group, reports preliminary results for the year ended 31 December 2013.

 

Highlights

·      Adjusted EPS* up 10.2% to 257.9 cent

·      Group revenue of €5.8 billion reflecting 4.6% underlying sales growth

·      Continuing business volumes +3% and pricing +1.6%

·      Trading profit increased by 9.4% to €611m

·      Group trading margin up 90 basis points to 10.5%

Ø Ingredients & Flavours + 90 basis points to 12.9%

Ø Consumer Foods + 30 basis points to 8%

·      Major milestones achieved in 1 Kerry Business Transformation Programme

·      Final dividend per share of 28 cent (Total 2013 dividend up 11.7% to 40 cent)

·      Record free cash flow of €412m (2012 : €344m)

·      Industry-leading RD&A investment

*before brand related intangible asset amortisation and non-trading items (net of related tax)

 

Commenting on the results Kerry Group Chief Executive Stan McCarthy said; "The Group achieved good underlying growth ahead of our markets in 2013 and a 10.2% increase in adjusted earnings per share. Our performance reflects continued business margin improvement and strong cash generation. We are well focused on our targeted nutrition, taste and developing market platforms for growth. Based on current exchange rates, the Group expects to achieve 6% to 10% growth in adjusted earnings per share in 2014".

 

 

 

Contacts:

Media

Frank Hayes, Director of Corporate Affairs

Tel:  +353 66 7182304

Email: corpaffairs@kerry.ie

Kerry Web Site: www.kerrygroup.com

      

Investor Relations

Brian Mehigan, Chief Financial Officer

Ronan Deasy, Group Controller

William Lynch, Head of Investor Relations

Tel: +353 66 7182253

Email: investorrelations@kerry.ie

 

 

CHAIRMAN'S STATEMENT

for the year ended 31 December 2013

 

In 2013 Kerry Group achieved a solid financial performance whilst successfully advancing our 1 Kerry Business Transformation Programme and building a strong platform for the future growth of the organisation. Against a background of weaker economic conditions in many developed and developing markets, the Group achieved good underlying growth ahead of our markets, continued margin improvement and strong cash generation. Our 2013 performance and results reflect the strength of Kerry's taste and nutrition platforms and customer-focused business model - supported by the Group's major investment in Kerry Global Technology & Innovation Centres and Regional Development & Application Centres in recent years. Our developing market strategies continued to deliver strong growth and market development despite reduced economic growth in some regions.

 

Raw material cost increases were successfully managed in collaboration with customers. The Group's 1 Kerry Business Transformation Programme was significantly advanced during 2013 which considerably assisted business performance and delivered excellent results in globally aligning our business manufacturing and technology portfolio whilst optimising functional and management resources. Recent Group acquisitions were also successfully integrated in line with the 1 Kerry Programme enabling realisation of the technology and business synergy benefits.

 

Consumer foods markets in the UK and Ireland remained highly competitive due to negative underlying market growth rates, increased market polarisation and a continued high level of promotional activity. While Kerry Foods is best positioned in its market categories with strong brand shares, the division continues to focus its business model on its core offerings and to reconfigure its business portfolio for sustained profitable growth in line with Group metrics.  

 

RESULTS

Group revenue at €5.8 billion reflects underlying sales growth (USG) of 4.6%. Continuing business volumes increased by 3% and pricing increased by 1.6% - broadly offsetting input cost inflation of approximately 4%.

 

Sales and trading performance in ingredients & flavours maintained continued growth momentum in 2013. Continuing business volumes increased by 4.1% and net pricing increased by 1.8%. Continuing business volumes increased marginally in Kerry Foods and net pricing increased by 1.2%.

 

Group trading profit increased by 9.4% to €611m reflecting 10.6% like-for-like (LFL) growth. The Group's focus on added value business development, coupled with the elimination of non-core business activities and significant business operational improvements due to the 1 Kerry Business Transformation Programme, contributed to a 90 basis points improvement in the Group trading profit margin to 10.5%. This reflects a 90 basis points improvement in trading margin in ingredients & flavours to 12.9% and a 30 basis points improvement in Kerry Foods' margin to 8%.

 

Adjusted profit before tax, brand related intangible asset amortisation and non-trading items increased by 9% to €532m. The income statement charge arising from integration of acquisitions, restructuring/reorganisation costs, impairments and loss on disposal of non-current assets/businesses amounted to €352m (net of tax) resulting in a net cash outflow of €41.6m after tax.

 

Adjusted profit after tax before brand related intangible asset amortisation and non-trading items increased by 10.3% to €453m. Adjusted earnings per share increased by 10.2% to 257.9 cent (2012: 234 cent). The Board recommends a final dividend of 28 cent per share, an increase of 12% on the 2012 final dividend. Together with the interim dividend of 12 cent per share, this brings the total dividend for the year to 40 cent, an increase of 11.7% on 2012.

 

Expenditure on research and development at €186m was similar to the prior year level. Net capital expenditure amounted to €177m (2012 : €156m). The Group achieved a record free cash flow of €412m (2012 : €344m).

 

BUSINESS REVIEWS

 

INGREDIENTS & FLAVOURS 

 


2013

 Growth

Revenue

€4,327m

5.9%*

Trading profit

€558m

10%

Trading margin

12.9%

+90bps

*(USG)

 

Kerry provides the largest, most innovative portfolio of taste & nutrition systems and functional ingredients & actives for the global food, beverage and pharmaceutical industries.

 

Sales revenue grew by 2.4% on a reported basis to €4.3 billion, reflecting underlying sales growth of 5.9%. Continuing business volumes increased by 4.1% and pricing increased by 1.8%. Solid growth was achieved in all regional developing markets.

 

Kerry's ingredients & flavours business performed well throughout all geographic markets in 2013, benefiting from its leading taste, nutritional and functional ingredients & actives technology platforms. Demand for nutritional enhancement, health & wellness offerings without compromising on taste, wider flavour profiles, convenient on-the-go and snacking options, coupled with increased momentum towards clean-label solutions continued to drive innovation - providing good growth opportunities for Kerry's technology portfolio. Reported revenue grew by 2.2% in Savoury & Dairy systems, 7.4% in Beverage systems, 5.2% in Pharma / Functional ingredients while Cereal & Sweet reported revenues declined by 2.4%.

 

Trading profit grew by 10% to €558m and the division's trading margin increased by 90 basis points to 12.9%. In 2013 ingredients & flavours accounted for 73% of Group revenue and 81% of Group trading profit.

 

Development and investment in the Group's Global Technology & Innovation Centres and Regional Development & Application Centres continued to drive successful product innovation through key global and regional accounts. 

 

Americas Region

 

Kerry achieved a strong performance throughout North and South American markets in 2013 despite sectoral issues in some food industry categories. Solid market development was achieved through key food processor and foodservice accounts. Performance was boosted by successful integration of businesses acquired in 2011 / 2012 and through acquisitions completed during the year under review. Revenue in the Americas region increased by 4.2% on a reported basis to €1,882m, reflecting underlying sales growth of 6.2%. Continuing business volumes grew by 4.4% and pricing increased by 1.8%. 

 

Beverage systems & flavours maintained strong growth across all segments of the market including new nutritional beverage launches leveraging Kerry's ingredients, flavours and packaging / processing capabilities. Tea and coffee applications recorded strong growth in particular in the foodservice channel through major chains and through Kerry's branded products. Beverage flavours, benefiting from integration of the Cargill's flavours business, saw continued growth in particular through flavour modulation delivering enhanced taste and nutritional benefits. Craft and speciality beverages also provided good growth opportunities. Big Train acquired prior to year-end 2012 was successfully integrated providing a significant boost to the Group's branded beverage portfolio in all geographic regions. Development in LATAM markets benefited from Kerry's locally established production facilities and Innovation Centre contributing excellent growth in the soft drinks segment and in the fast growing foodservice beverage sector.

 

Savoury, Dairy & Culinary systems & flavours saw slower growth due to weaker market conditions in some industry segments. Kerry technologies continued to benefit from growing consumer demand in the chilled, frozen and shelf stable yoghurt sectors. Multiple line extensions in prepared meals, sides and breakfast menus provided good growth for Kerry's sauce technologies which benefited from integration of the Millennium Foods business acquired in August 2012. Seasonings achieved good growth through key global and regional accounts in the snacks sector and also through major launches in the fast growing QSR breakfast segment. Strong growth was achieved through coatings systems in the meat sector. Demand for clean-label and gluten-free products also provided strong innovation and product development opportunities. Successful integration of Griffith do Brasil assisted growth in added-value segments of LATAM markets.

 

Prior to year-end, the Group acquired US based Wynnstarr Flavors - an industry leader in savoury flavours with a strong heritage in chef-style culinary flavours development and well established customer relationships - in particular with foodservice solutions providers in North American markets. Operating from modern flavour development facilities in Congers, NY and in Louisville, KY, Wynnstarr creates, develops and produces natural savoury flavour solutions utilising proprietary manufacturing processes.

 

Cereal & Sweet technologies performed well against a background of reduced sales in some industry sectors - in particular the RTE breakfast cereals market. Kerry maintained growth through wider applications in the nutritional and energy bar segments and through 'on-the-go' breakfast menu options. Demand for high-protein lines also provided market development opportunities in both the bar and cereals sectors. Kerry's innovation capabilities in sweet technology achieved good growth in the ice cream, frozen desserts, yoghurt and bakery end-use-markets. Shelf life extension technologies continued to record solid growth in confectionery and bakery markets.

 

Pharma ingredients grew solidly through excipient and coatings applications benefiting from the Group's expanded production facilities in the US and India. Regional developing markets are providing double digit growth opportunities for cell nutrition products in pharmaceutical and bio-technology applications.

 

EMEA Region

 

With challenging market conditions across Europe impacting growth in many food and beverage industry segments, Kerry continued to realign its regional business operating footprint through the Group's 1 Kerry Business Transformation Programme which benefited financial performance in 2013. A major focus on expanding business growth platforms in EMEA developing markets, including the Middle East, North Africa and Turkey, Russia & Eastern Europe and the Sub-Saharan Africa regions achieved excellent results to-date through increased innovation and development in line with global and regional zone growth programmes.

 

Revenues in the EMEA region at €1,601m were broadly unchanged on a reported basis reflecting underlying sales growth of 4%. Continuing business volumes grew by 2% and pricing increased by 2%.

 

The work programme to establish a Kerry Global Technology & Innovation Centre in Ireland to serve the Group's global and regional customers in the EMEA region is well advanced and on schedule to be operational in early 2015. As announced the Group is investing €100m in the new Centre which will provide strategic customers with access to Kerry's complete breadth and depth of technologies and will be a focal point for all scientific research, innovation, technology and product development. In October 2013, Kerry opened a new Regional Development & Application Centre in Dubai to serve the Group's customer base in the Middle East, North Africa and Turkey.

 

Beverage systems & flavours recorded solid growth particularly in the foodservice channel - consolidating Kerry's position as the leading provider of hot and cold coffee solutions, and beverage and sweet syrups in Western European markets. In the branded segment Big Train lines including cappuccino mixes, protein mixes, smoothies and flavoured syrups were added to the Da Vinci range. Market development also benefited from the successful integration of Cargill's flavours business. Citrus technologies recorded good growth in Northern European markets. Good progress was achieved in Sub-Saharan Africa through innovative brewing and beverage flavour solutions to leading brewers.

 

Savoury, Dairy & Culinary systems performed satisfactorily notwithstanding a slowdown in product development due to competitive industry issues. Health and wellness trends continued to increase demand for Kerry's sodium reduction and umami technologies. Growing demand for convenience lines resulted in strong growth through culinary and dairy systems in developing markets. Meat systems performed well despite the challenging industry conditions including the impact of the Equine DNA issues on consumer confidence in Northern Europe. However the warm summer weather provided good growth opportunities in barbeque segments. Further advances in clean label functional meat systems also led to good growth in store-cupboard ingredients applications.

 

Cereal & Sweet systems and flavours performed satisfactorily. Good growth was achieved in the bakery and cereal bar categories through Kerry's unique low-water activity fillings and textured sauces. In the ice cream sector good growth was recorded through development of new inclusion lines for premium and super premium applications. South Africa based Orley Foods acquired in March performed well, providing a significant boost to Kerry in meeting customer requirements for sweet ingredient solutions in regional developing markets. Kerry continued to achieve satisfactory growth in niche sectors of the RTE cereals market.

 

In line with the Group's Nutrition strategy, significant progress was achieved in 2013 in broadening Kerry's portfolio of General Wellness & Enabling Technologies, Nutritional Ingredients & Actives and Nutrition Delivery Systems. Performance of the business was strong particularly in developing markets. Significant growth was achieved in premium infant nutrition applications. Kerry hydrolysed proteins also grew through innovative nutritional products launched in China.

 

Primary Dairy market prices increased significantly in 2013 due to increased demand in importing countries and a relatively tight global supply position.

 

Asia-Pacific Region

 

While economic growth was below recent levels in Asia, Kerry continued to record strong market development throughout the Asia-Pacific region. Consumer demand in some Asian countries was slightly reduced due to relatively weaker currencies, but demand for the Group's nutritional systems, taste solutions and functional ingredients & actives continues to increase at encouraging levels. Reported sales revenue in the region grew by 5.4% to €765m reflecting underlying sales growth of 9.8%. Continuing business volumes grew by 8.2% and pricing increased by 1.6%.

 

Savoury & Dairy systems saw slower growth in line with consumer demand trends. However growth was maintained in the rapidly expanding foodservice sector in the region. Dairy systems performed well in the bakery and snacking end-use-markets. Lipid systems grew satisfactorily through nutritional applications in China. Sectoral issues in the Australian meat industry impacted innovation levels but volume growth was maintained through seasonings and coatings' applications.

 

Sweet technology expansion was further progressed in the region with strong development throughout the regional bakery sector. Kerry Pinnacle maintained strong growth in the Australian lifestyle bakery segment with significant launches in major retail chains. In December Kerry announced the establishment of a new custom-built manufacturing facility to meet growing demand for prepared bakery products in Melbourne, Australia.

 

Beverage systems maintained solid growth. Benefiting from the Cargills' flavours acquisition, beverage flavours grew strongly in particular through tea and coffee applications in South East Asia and through sweet beverage applications in South West Asia. Kerry's branded beverage offerings including Da Vinci, Café D'Amore and Big Train performed well in the foodservice sector.

 

Functional ingredients continued to perform well in particular through enzymes in the bakery and beverage sectors and through protein hydrolysates in the Asian nutritional sector.

 

In 2014 Kerry will establish a Global Technology & Innovation Centre and regional headquarters for Asia in Singapore. The Centre will be supported by Kerry Regional Development & Application Centres in China, India and Thailand. In addition the Group is also establishing five Regional Customer Centres in Indonesia, Japan, Korea, the Philippines and Vietnam. 

 

 

CONSUMER FOODS

 


2013

 Growth

Revenue

€1,601m

1.3%*

Trading profit

€129m

(2.9%)

Trading margin

8%

+30bps

*(USG)

 

Kerry Foods is a leading manufacturer and marketer of added-value branded and customer branded chilled foods principally to the UK and Irish consumer foods markets.

 

Consumer confidence remained weak in the UK and Ireland in 2013 as inflation continued to outstrip growth in average incomes. Sales through Discounter retail channels, Convenience multiples / Symbol groups and private label offerings continued to grow. 'On-line' is playing an increasing role in supporting retail sales, adding to competitive marketplace pressures and structural changes in customer service. In addition weak underlying market growth continues to fuel competition for market share with promotional activity focused on price maintained at a high level in most food categories.

 

Kerry Foods' strong market positioning assisted performance - in particular in the UK branded sector. The division commenced a major review of its business portfolio and to reconfigure its business structures for sustainable profitable growth. The ongoing restructuring programme to refocus its business model on its core offerings impacted sales in 2013 - in particular in the direct-to-store services to the independent and convenience retail sectors in the UK and Ireland. Reported revenues decreased by 6.5% to €1,601m, despite underlying sales growth of 1.3%.  Continuing business volumes increased slightly relative to the prior year and net pricing increased by 1.2%. Trading profit decreased by 2.9% to €129m. The business restructuring programme to-date contributed to the division's 30 basis points improvement in trading margin to 8%.

 

As previously stated, against the background of major structural changes in the marketplace, Kerry Foods is focused on strengthening its consumer foods business portfolio to achieve a high quality business in line with Group metrics. Capitalising on snacking, health and convenience trends, this investment programme will focus on a Kerry Foods' portfolio capable of driving sustained profitable growth. Businesses which are underperforming relative to the division's strategic objectives or non-core to this market growth strategy are held for sale.

 

UK Brands maintained a solid performance despite competitive market pressures. Richmond remains the number 1 sausage brand in the UK, having grown by 5.7% in 2013. Strong growth was achieved in the frozen segment. Richmond has leveraged its brand strength by launching into tea time protein solutions through 'Richmond Mini Meat Balls'. Wall's Pastry grew its overall market share and in its core sub-sector of sausage rolls the brand grew to become the number 1 sausage roll brand in the UK. A highlight of the year was the growth of the Mattessons brand in the meat snacking sector. Fridge Raiders achieved double digit growth and in September a new innovative meat snack line 'Double Dippers' was successfully launched.

 

Cheestrings UK volumes were lower in 2013 due to reduced promotional activity. Cheestrings Flavours were added to the range in May - bringing new shoppers to the children's cheese snack category. In October, Cheestrings Spaghetti won the "Taste 13" innovations award at ANUGA - the worlds' largest Food Fair. To meet demand for healthy 'on-the-go' dairy snacks, in September LowLow introduced 'LowLow Snack Packs' - a combination of LowLow cheese, crackers and chutney in a convenient snack format.

 

Performance in Kerry Foods' UK Customer Brands categories was impacted by a number of sectoral issues in 2013. Category growth rates in chilled ready meal and frozen ready meal categories were reduced due to the Equine DNA issues which unfolded during the first quarter and by the hotter than usual summer weather conditions. The chilled ready meals category showed 2% value growth year-on-year, with ready-to-cook recording similar value growth. Sales in the frozen meals category progressively recovered during the year but by year-end the category still reflected an 11% decline compared to the year earlier level. In the dairy sector cheese slices performed well but customer branded dairy spreads lost market share to heavily promoted branded offerings.

 

Brands Ireland had a mixed performance in a highly competitive marketplace where value offers grew market share. The Galtee and Shaws pork product ranges performed well while the Denny brand share was impacted by heavily discounted private label offerings. Denny extended the 100% Natural Ingredients offerings to a wider product range in the sliced meats sector gaining new listings and incremental volume in key accounts.

 

In the Irish dairy products sector, Dairygold maintained its brand leadership in the spreads sector achieving 2% value growth. 'Dairygold Baking Block' launched in late 2012 in response to strong growth in homebaking trends achieved solid market penetration.

 

Cheestrings continued to expand its market positioning in France, Germany and the Netherlands and prior to year-end was successfully launched in Poland and Austria.

 

 

 

FINANCIAL REVIEW

Reconciliation of adjusted earnings

to profit after taxation*

 

%

Change

 

2013

€m

 

2012**

€m

 

 

 

Revenue

 

 

 

(0.2%)

 

 

 

5,836.7

 

 

 

5,848.3

 

Trading profit

 

Trading margin

 

Computer software amortisation

 

Finance costs (net)

 

9.4%

 

 

 

 

 

 

611.4

 

10.5%

 

(11.5)

 

(67.6)

 

559.0

 

9.6%

 

(8.7)

 

(62.1)

Adjusted earnings before taxation*

 

Income taxes (excluding non-trading items)

9.0%

 

 

532.3

 

(79.1)

488.2

 

(77.3)

Adjusted earnings after taxation*

 

Brand related intangible asset amortisation

 

Non-trading items (net of related tax)

10.3%

 

 

 

 

453.2

 

(16.6)

 

(352.2)

410.9

 

(14.7)

 

(135.5)

Profit after taxation

(67.6%)

84.4

260.7



EPS

EPS



Cent

Cent

Adjusted EPS*

 

Brand related intangible asset amortisation

 

Non-trading items (net of related tax)

 

10.2%

 

 

 

 

 

257.9

 

(9.4)

            (200.5)

234.0

 

(8.4)

 

(77.2)

Basic EPS

(67.7%)

48.0

148.4

*Before brand related intangible asset amortisation and non-trading items (net of related tax)

**Comparatives have been restated to reflect the adoption of IAS 19 (2011) 'Employee Benefits'

(LFL) Like-for-like growth excludes the impact of acquisitions, disposals and foreign exchange translation

 

Analysis of Results

Like-for-like (LFL) revenue grew 1.5% after allowing for the impact of business acquisitions net of disposals of 1.4% and the negative reporting currency impact of 3.1%. On a reported basis Group revenue decreased by 0.2% to €5.8 billion. Continuing volumes grew by 3.0% while product pricing increased by 1.6% amounting to 4.6% underlying sales growth (USG). Rationalisation volumes, due to restructuring of production across the Group's manufacturing sites and the exit of non-core businesses, amounted to 3.1% for the year.

 

LFL revenue growth was 3.4% in ingredients & flavours after allowing for the impact of business acquisitions net of disposals of 2.3% and a negative reporting currency impact of 3.3%. On a reported basis ingredients & flavours revenue increased by 2.4% to €4.3 billion. Continuing volumes grew by 4.1% while pricing increased by 1.8% reflecting 5.9% underlying sales growth. Rationalisation volumes amounted to 2.5% for the year.

 

In consumer foods LFL revenue decreased by 3.2% after allowing for the impact of business disposals of 0.7% and the negative reporting currency impact of 2.6%. On a reported basis consumer foods revenue decreased by 6.5% to €1.6 billion. Continuing volumes grew by 0.1% while pricing increased by 1.2% reflecting 1.3% underlying sales growth. Rationalisation volumes amounted to 4.5% for the year.

 

On a reported basis Group trading profit increased by 9.4% to €611m (2012: €559m). This equates to LFL growth of 10.6% allowing for the negative impact of reporting currency of 3.5% and the contribution from business acquisitions net of disposals of 2.3%. 

 

Group trading profit margin increased 90 basis points to 10.5% (2012: 9.6%). Ongoing added value business development which is improving product mix, coupled with the benefits accruing through the 1 Kerry Business Transformation Programme and the positive impact from exiting non-core business activities contributed to the improvement in the Group trading profit margin.

 

Finance Costs (net)

Finance costs (net) for the year increased by €5.5m to €67.6m (2012: €62.1m) primarily due to higher interest rates. The Group's average interest rate for the year was 4.0% an increase of 50 basis points from the prior year (2012: 3.5%).

 

Non-trading Items

Non-trading items of €352.2m net of tax (2012: €135.5m) were recorded in 2013 with a net cash outflow of €41.6m (2012: €42.8m).

 

The Group recorded €189m (2012: €99.8m) of costs net of tax relating to the acquisition and restructuring programme. Acquisition integration costs of €82.9m (2012: €58.9m) relate to the integration of recently acquired businesses in order to fully realise the technology and synergy benefits of these acquisitions. Footprint and supply chain costs of €69.7m (2012: €40.9m) are also included in this charge and these relate to the implementation of the Group's 1 Kerry Business Transformation Programme to provide more efficient and focused manufacturing operations. The final element of the programme relates to Technology & Innovation Centre Integration costs of €36.4m (2012: nil) arising from the establishment of the Group's Global Technology & Innovation Centres.

 

During 2013, the Group also disposed of a number of non-core businesses along with some property, plant and equipment.  A loss of €54.3m (net of tax) was recorded on these disposals while the net cash inflow was €23.0m. The Group also recorded a non-cash impairment of assets in the period of €108.9m net of tax (2012 : nil). This impairment charge relates primarily to non-core convenience channel assets in Kerry Foods which are being marketed for sale following a fundamental review of 'go-to-market' strategies.

 

Taxation

The tax charge for the year, before non-trading items, was €79.1m (2012: €77.3m) representing an effective tax rate of 15.3% (2012: 16.3%). The decrease in the effective tax rate, which excludes the impact of non-trading items, was primarily driven by the geographical mix of profits.

 

Exchange Rates

Group results are impacted by fluctuations in exchange rates versus the euro, in particular movements in US dollar and sterling exchange rates.  The average and closing rates for US dollar and sterling used to translate reported results are detailed below:  

 

 

Average Rates


Closing Rates

 

2013

2012


2013

2012

USD

1.32

1.28


1.38

1.32

STG

0.84

0.81


0.83

0.82

 

Free cash flow is seen as an important indicator of the strength and quality of the business and of the availability to the Group of funds for reinvestment or for return to the shareholder.  In 2013 the Group achieved a free cash flow of €412.1m (2012: €344.5m) analysed below with a free cash flow to EBITDA conversion rate of 57.2%.

 

Original source: Kerry Group