Kerry Group has posted revenue of €3.6 billion in the first half of its financial year, reporting 3.3% volume growth across the business.
Commenting on its performance, Edmond Scanlon, Kerry Group chief executive, said he was "pleased with business performance in the period, as the group continued to deliver volume growth ahead of the market while expanding trading margins in line with expectations."
Here's how leading market analysts viewed its performance:
Liberum Consumer Team
"Kerry boasts the recipe for long-term success: robust volume growth, margin upside potential and rising FCF powering an 8% 2017-22E EPS CAGR pre M&A. The group’s ingredients platform provides unrivalled breadth of solutions backed by global technology and innovation centres and regional development and application centres that service a diversified customer base.
"As Kerry’s customers go through a major churn in their product portfolio, the strong ingredients platform allows the group to take market share, improve mix and enhance margins. Accretive bolt-on M&A is a key driver - we estimate Kerry has €1.1bn+ firepower (plus a further €1bn if Consumer Foods is sold) available to consolidate the ingredients market."
David Fahy, Cantor Fitzgerald
"Another positive set of results from Kerry, again proving its ability to consistently expand volumes and profitability. Taste & Nutrition continues to show robust growth driven by its core pillars (as outlined at its capital markets day). Growth was strong across regions and the recent acquisitions of Southeastern Mills, Fleischmann’s and Ariake will add further to revenue. The Consumer Foods business performed reasonably well despite the challenges within its marketplace.
"We continue to see Kerry Group as a leader within the Food sector and a stock which should be held over the long term. We recently downgraded our recommendation to Market Perform as its valuation (27x P/E) had become stretched. However, given the macroeconomic backdrop, Kerry’s high quality nature will likely see it to continue to trade at a significant premium for the foreseeable."
Cathal Kenny, Davy
"In the context of an underwhelming results season from its peer set, Kerry’s interim report and outlook reassures and suggests continued operating momentum through H2 2019. Kerry continues to execute on its Taste & Nutrition (T&N) growth algorithm of volume growth, margin expansion and reinvestment. We envisage no material change to FY 2019 forecasts."
Jason Molins, Goodbody
"Kerry reported solid H1 results this morning, with adjusted EPS of 164.1c which is c.4% ahead of our 157.7c forecast. It represents 8.4% constant currency growth yoy (vs. GBY +6.5%) with the beat primarily driven by a lower than expected finance charge in the period together with a small beat at the operating profit level (post IFRS16). In the period, Group volume growth was in-line with forecast at + 3.3% and margins were up 20bps to 10.7% (vs. +13bps forecast). Net debt was in-line with expectations at €1.9bn, leaving net debt/EBITDA at 1.9x.
"In terms of outlook, management has narrowed its FY19 constant currency EPS guidance and is now looking for +7-9% (previously +6-10%). We currently forecast c.7% c.c. EPS growth and are likely to nudge up towards the middle of the range."
Investec
"Kerry this morning issued a solid set of H119A numbers, reporting a 13.9% increase in adj. EPS to 164.1c from a 12.6% increase in trading profit to €382.9m and 10.7% increase in Group revenue to €3.57bn. At a Group level LFL revenue growth of 3.3% comprised volume growth of 3.3% and flat pricing.
"The outperformance versus our forecasts was in contribution from acquisitions (4.7%) and FX tailwinds (2.7%). On a constant currency basis, management has marginally tightened adj. EPS guidance to the 7% to 9% range from 6% to 10%. [...] H119A results are largely in line with market expectations but guidance has been marginally tightened downwards."
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
