Ingredients and flavours strong for Kerry within ‘stable, unsurprising’ results

In results published today, the Ireland-headquartered company pegged its 2011 earnings at €5.3bn, with a ‘milestone’ trading profit of €501m and an overall earnings growth of 6.9% for 2011.

It detailed a steady performance in its ingredients and flavours division, pegged at €3,706m with a 7.7% LFL (like-for-like) growth for 2011 and weaker results for its consumer products business, valued at €1,674m with just a 3.2% LFL growth.

Consumer trends for natural flavours and healthier formulations favour our technologies, Frank Hayes, director of corporate affairs, told FoodNavigator.com.

“Our ingredients and flavours business has the broadest range and greatest depth of technologies that can meet consumer requirements,”​ Hayes said.

The group’s 2011 performance delivered on objectives set despite the continuing economic challenges, he said, referencing high raw material costs, input cost inflation and weak consumer confidence.

Joe Gill, a broker with Dublin-based Bloxham Stockbrokers, said that the results while very assuring, feature no major positives or negatives and are not surprising, just steady.

“Stable growth has been the pattern of Kerry for many years. It believes in a steady growth of between 8-12% a year and so the company is very pleased with these results,” ​Gill said.

‘Solid’ ingredients and flavours performance​

Takings grew across all technology sectors within the ingredients and flavours business arm with beverage systems performing strongest with a 12.6% growth, followed by pharmaceutical, nutritional and functional ingredients (9.1%), savoury and dairy systems (7.9%) and cereal and sweet systems (5.4%).

The group said that innovation continues within this sector driven by consumer demand for ‘free-from foods’, reduced fats and salts, naturals and enhanced dietary and nutritional products.

James Targett, senior analyst at private banking firm Berenberg Bank, said that increased consumer demand for reformulation is driving growth in the ingredients and flavours segment of Kerry Group.

He noted the segment saw a “very solid performance… with a strong underlying growth and resilient margins.”​

Changing growth strategies​

In December Kerry purchased Cargill’s global flavours unit for €170m (US$230m) marking part of the group’s wider growth strategy and dedication to flavours and food ingredients.

A total of €386.4m was pumped into acquisitions in 2011, but Gill said fewer funds will be committed to external growth in 2012.

“Despite the group having the fire power to do so, I’d assume that the focus will be on internal growth instead of acquisitions in 2012… I would imagine the spend [on acquisitions] will be closer to €250m, so slightly less,” ​Gill said.

However, Kerry today confirmed the completed acquisition of South African flavours company FlavourCraft for an undisclosed sum, a move it said signalled its commitment to expansion across the African continent.

FlavourCraft specialises in the development of flavours for meats, soups, sauces, dressings and savoury snacks in the South African and sub-Saharan markets, particularly Nigeria.

In the annual figures released today, the largest sales growth for 2011 was realised in the Asia Pacific region, with a 12% LFL growth driving revenues to €605m and a business volume growth of 10%.

EMEA (Europe, the Middle East and Africa) sales were pegged at €1,475m with revenues from the Americas pulling in just over at €1,558m.