Kerry plans strategic review of dairy business in Ireland, Britain

Kerry Group is to undertake a review of its dairy business in Ireland and Britain, its chief executive Edmond Scanlon said on Tuesday.

The review would consider dairy production and consumer food assets, and could result in a transaction, he said.

“We’re taking a stand back and doing a strategic review. Evaluating several options. One of those options could lead to a transaction but may not lead to a transaction,” Scanlon said, adding the process may not conclude until the second half of the year. He declined to comment on the number of possible parties that might be interested in the assets or on their likely valuation.

Mr Scanlaon was speaking after Kerry published an update on its business performance that showed volumes return to growth in the final quarter of the year.

In preliminary results for the year ended December 31st 2020, the Irish listed food group said revenue reached €7 billion, down of 4 per cent, while volumes were down 2.9 per cent year on year. But there was cause for optimism, with volumes regaining ground over the year and rising 2.2 per cent in the fourth quarter.

Volumes in the group’s taste and nutrition unit fell 3 per cent year on year, while consumer foods volumes were down 2.6 per cent.

Trading profit was down to €797.2 million, from €902.7 million in 2019, with the group blaming Covid-19 for the decline.

Kerry reported a group trading margin of 11.5 per cent, with taste and nutrition at 14.2 per cent and consumer foods at 7.8 per cent.

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Adjusted earnings per share fell 12.3 per cent year on year, the company said, with basic earnings per share at 313.0 cent. The final dividend per share came to 60.6 cent, with total 2020 dividend rising 10.1 per cent to 86.5 cent.

Free cash flow fell to €412 million, down from €515 million in 2019.

Mr Scanlon said it had been a “truly unique” year due to the ongoing pandemic, but noted a number of distinctions in Kerry’s business performance.

“Sustained strong growth was achieved in the retail channel, primarily through growth in authentic cooking, plant-based offerings and health and wellness products. Performance in our foodservice channel was most significantly impacted in the second quarter, as the introduction of restrictions affected our customers’ operations,” he said. “The proactive nature of our business model has been a key driver of our strong recovery through the year, as we supported foodservice customers in adapting their operations and menus to cater for increased consumer demand for takeaway, online and delivery.”

The company also started strategic development of its Georgia, US facility, and completed a number of key acquisitions during the year.

“While uncertainty from Covid-19 continues to impact our customers, consumers and industry, we will continue to cocreate with our customers to meet accelerating consumer demands, and look forward to a year of strong recovery and good growth,” he said. – Additional reporting: Reuters


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