Kerry reports good growth but weak food sales

Kerry Group has reported good profitable growth for the year ended 31 December 2011, although consumer food sales were weaker then expected.

The company’s preliminary results statement showed that group sales revenue increase by 6.9% to €5.3bn (£4.4bn) in 2011, reflecting like-for-like (LFL) growth of 6.4% and taking into account acquisitions and currency translations. Group trading profit reached a milestone level of €501m (£419m), an LFL increase of 7.1%.

This was driven primarily by strong growth in the group’s global ingredients and flavours division, with revenue increasing by 8.5% to €3,706m (£3,100m), reflecting 7.7% LFL growth. Business volumes in this division grew by 3.8% and trading profit increased by 9.4% LFL to €439m (£367m).

Growth in the group’s UK and Ireland-based consumer foods division was slower, with revenue increasing to €1,674m (£1,400m), reflecting 3.2% LFL growth. Overall business volumes grew by 1.1%, reflecting 2.6% volume growth in the UK and a decline of 2.6% in Ireland. Trading profit showed 1% LFL growth at €130m (£109m).

The company said that volume growth in the consumer foods sector had been “moderated” by further tightening of houshold budgets in Ireland and the UK, which had continued to drive value consumption and increased promotional activity in the consumer food market, heightening competition across branded and private-label offerings.

Despite this, Kerry Foods’ UK brands achieved strong performance in the UK market, with Richmond maintaining good brand share growth in the sausage sector and Wall’s continuing to establish brand leadership in sausage rolls, although it lost brand share in the fresh sausage market. Mattessons continued to grow the meat snacking sector, but ‘Fridge Raiders’ margins were adversely impacted by increased raw material costs. Mattessons ‘Rippa Dippa’ range, introduced in late 2010, recorded good progress.

The company added that there was some loss of business in cooked meats and ready meals, but it continued to record good growth in chilled ready meals.

Kerry group chairman Denis Buckley said: “The group’s ingredients and flavours businesses grew steadily in all regions, benefiting from Kerry’s breadth and depth of technology and approach to market developments, providing industry-leading integrated solutions.

“Cost recovery in the group’s consumer foods markets in Ireland and the UK proved more challenging, due to the prevailing economic situation and level of price promotional activity in both markets. However, while Kerry Foods saw a moderation in volume growth as the year progressed, profitability in the division was maintained, due to ongoing business efficiency programmes and successful innovation focused on value consumer offerings.”

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