IRELAND: Tough first half for Kerry Group
Ingredients, flavours and consumer foods producer Kerry Group has posted a 7% increase in first-half revenues to EUR2.27bn (US$2.91bn), after what the group described as an "extremely challenging" six months.
"As previously signalled, the first six months of 2006 have proved extremely challenging," said chief executive Hugh Friel. "The delay in recovering the significant energy related cost increases slowed growth during the period. However, we have full confidence in our growth strategies, and our longer term growth performance will benefit from critical attention to on-going cost recovery programmes, supply chain efficiencies, increased investment in product innovation and asset optimisation - including elimination of non-core activities."
The first-half revenue increase reflected like-for-like growth of 3.5%. But in spite of cost recovery programmes proving successful in most territories, the impact of energy related cost increases restricted growth in trading profit, which rose by 1.5% to EUR162m. This resulted in a group trading margin of 7.2%, 40 basis points below the same period of 2005.
Profit after taxation was on a par with last year at EUR101m, with earnings before intangible asset amortisation and non-trading items rising by 2.3% to EUR103m.
Kerry's food ingredients businesses recorded like-for-like revenue growth of 5%, with total sales revenues increasing by 6.5% to EUR1.55bn. Trading profits grew by 4% to EUR123m.
Sales at Kerry's consumer food businesses rose by 6.6% to EUR875m. However, trading profits fell by 4.6% to EUR52m, as difficult market conditions restricted cost recovery programmes aimed at offsetting significant energy, packaging and distribution cost increases.
Kerry said that in spite of the current competitive trading environment and rising cost pressures, it is "well positioned across global growth markets and its strong technology platforms will continue to lead innovation and category growth".
However, the company added that it planned to sell or close a further ten manufacturing facilities, which it expected to contribute an improvement of 25 basis points per annum to the group trading margin. Kerry said earnings for the full year are expected to be in line with current market expectations.
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