Kerry Group is reportedly gearing up to sell its frozen food unit as it increases focus on the ingredients side of its operations.
According to a report in The Daily Telegraph, Kerry is working with IBI Corporate Finance on options for its frozen food unit, with manufactures ready meals for UK retailers. The company also produces branded frozen foods such as Sharwood’s, Paxo and Bisto under license from Premier Foods plc but it is unclear whether this business would be included in the sale.
Kerry, whose consumer foods business includes brands such as Cheestrings, Mattessons and Wall’s, has been focusing on its more profitable ingredients business.
The company does not break out numbers for its frozen operations but in its most recent sales update the group revealed that lower consumer food volumes weighed on the firm’s overall performance. The Irish food maker said total volumes in the first nine months of the year climbed 2.4%, despite a 1.2% drop in consumer volumes.
Goodbody Stockbrokers analyst Liam Igoe told just-food a sale would make strategic sense for Kerry and played down the likelihood of Kerry disposing of its other consumer businesses. “Frozen is mainly Rye Valley Foods which was acquired by Golden Vale and which itself was acquired by Kerry. It sells mainly frozen ready means in the UK to supermarkets. It’s a low margin business and it does make sense that Kerry would sell it to concentrate on its branded chilled business, such as Walls – so the latter would not be for sale,” he said.
Kerry declined to comment.
Click here for our Deal or no deal analysis into the speculation.