Kerry Group, the Irish food business, is set to emerge from a challenging 2009 with earnings that exceed its expectations.
The company has battled the weakness of sterling throughout the last 12 months, which has weighed on a consumer foods business operating in a challenging economic environment.
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At the same time, the group has looked to restructure its ingredients and flavours division in a bid to improve efficiency.
Nevertheless, Kerry said in November that it expected its 2009 earnings per share to fall into the upper end of its 160 cent to 165 cent forecasted range despite sales in the first ten months of 2009 being down 6% on the year.
That upbeat forecast came on the back of Kerry’s belief that margins would be boosted by the restructuring in ingredients and flavours amid a “modest improvement” in underlying volumes throughout the business.
Sam Farthing, an analyst at Merrion Stockbrokers in Dublin, sees Kerry’s earnings per share for 2009 reaching 166 cents, slightly higher than the very top of the company’s own forecast. According to Farthing, the consensus prediction is higher still – at 167 cents.
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By GlobalDataFarthing also forecast EBITA margins up 73 basis points but predicted a 3.7% fall in annual turnover to EUR4.61bn.
“The market will be expecting to see some improving top line trends in the ingredients business, particularly in the US,” Farthing said. “Kerry’s consumer foods is positioned well in relatively defensive categories and is expected to have performed, and to continue to perform, solidly in a difficult consumer environment.”
Kerry’s plans to breathe fresh life into its ingredients business will be among the initiatives industry watchers will be studying.
Meanwhile, commentators will be looking out for Kerry’s M&A ambitions. In August, CEO Stan McCarthy said he wanted the group to bolster its ingredients business and expand further in Asia, where the company has a fledgling presence.
