Kerry Group Hikes Dividend By 11.7%

09 Aug 2018 | 04.08 pm

Kerry Group Hikes Dividend By 11.7%

H1 results impacted by stronger US dollar

09 Aug 2018 | 04.08 pm

Kerry Group has increased its interim dividend by 11.7% to 21 cent per share after H1 2018 net profit was just about exactly the same as a year ago.

Turnover for the period increased by 1.4% to €3,225m, though on a constant currency basis the revenue increase would have been 8.0%.

Like peer company Glambia, Kerry Group’s euro earnings have been adversely impacted compared with 2017 due to the dollar’s strength against the euro.

The company’s adjusted EPS in constant currency was up 9.0%, though the actual increase was marginal at 0.3% due to the US dollar factor.

CEO Edmond Scanlon commented: “Evolving consumer trends and the changing marketplace have provided increased opportunities and demand for Kerry’s industry leading RD&A and broad technology portfolio. This, along with the Group’s enhanced end use market focus, drove healthy volume growth and underlying margin expansion in the first half of 2018.

“We also continued to make progress with and invest in business development initiatives aligned to our strategic growth priorities. In light of the above, we update our guidance and now expect to achieve growth in adjusted earnings per share of 7% to 10% in constant currency.”

Consumer Trends

Scanlon added that major global consumer trends such as authenticity, healthfulness, sustainability, premiumisation, clean label and convenience aligned with local consumer preferences continue to drive increased innovation opportunities for the group.

“The agility of Kerry’s business model and integrated solution capability is more relevant than ever in supporting customers to optimise speed to market, in order to meet consumer preferences,” Scanlon explained.

“The group again delivered volume growth ahead of its markets. Taste & Nutrition achieved sustained volume growth in North America, solid growth in Latin America, a good performance in Europe and continued strong growth in APMEA. UK and Irish consumer foods markets encountered challenges in the period, though Kerry’s Consumer Foods division delivered a solid underlying performance.”

Check out the Kerry share price here

Scanlon added that growth prospects for the full year remain strong due to a good innovation pipeline, though he cautioned that there will be strong comparatives from the second half of 2017 – assuming the US dollar continues on its bull run.

“In February 2018, we guided growth in adjusted earnings per share of 6% to 10% on a constant currency basis. Given the momentum of the business, we now expect to achieve growth in adjusted earnings per share of 7% to 10% in constant currency,” Scanlon stated.

Merrion Capital analyst Darren McKinley commented: “Kerry Group trades on 24.4x 2019 earnings and offers investors a dividend yield of 0.7% supported by 2.3% free cash flow yield. Sell side analysts expect Kerry Group to report a modest decline in earnings per share to €3.48 before recovering to €3.80 in 2019. We think Kerry Group is fully valued up to December 2019 with no risk attributed for Brexit despite Kerry Group’s consumer food division considerably exposed. Our year-end fair value for the share is €85.”

 

Photo: Edmond Scanlon (centre) with CFO Brian Mehigan and Marguerite Larkin, designate Chief Financial Officer. (Pic: Colm Mahady / Fennells)

 

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