kerry foods

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Kerry Group (KYGA) has increased first-half sales by 4.8% to €3.2bn (£2.9bn) despite a decline in its consumer food division as the weak pound and increased raw material pricing took a toll.

The Irish food group recorded volume growth of 3.8% – 4.2% in its taste and nutrition division and 2.3% in consumer food – had outpaced industry levels.

Kerry said the growth in the results to 30 June reflected a good performance in American markets, an improved performance in the EMEA region and double-digit growth in the Asia-Pacific region.

Revenues were also helped by higher prices for its products but were held back by currency headwinds.

Trading profit in the half rose 5.2% to €338m (£305.6m), but pre-tax profits were flat at €256m after accounting for exceptional costs relating to acquisitions and asset write-offs.

CEO Stan McCarthy said: “Against a background of significant adverse currency movements, we achieved a strong overall business performance in the first half of 2017, outperforming market growth rates and delivering a 7.5% increase in adjusted earnings per share.

“In February 2017 we guided growth in adjusted earnings per share of 5% to 9% at prevailing exchange rates. Taking into account increased currency translation headwinds of 4% and a 2% improvement in underlying performance at constant currency rates, we now expect to achieve growth in adjusted earnings per share of 3% to 7% on a reported basis to a range of 333.1 to 346 cent per share.”

Kerry added that the consumer foods marketplace in the UK and Ireland remained highly competitive due to increasing inflationary pressures and overall competitiveness.

Sales at the consumer food arm fell 2.8% to €677m despite volume growth and higher prices as the group was hit by weakness in sterling compared with the euro. This resulted in a trading profit decrease of 11.1% to €51m.

Kerry said that demand for nutritional tasteful convenience products continued to drive good growth through meat and dairy snacking lines, with Mattessons performing well and Cheestrings growing market share.

Shares in Kerry are up 0.7% to €75.11 so far this morning.

Morning update

Irish ingredients and dairy group Glanbia (GLB) increased revenues 11.5% to €2bn (£1.8bn) in the first half, driven by a good performance for its nutrition division. Glanbia Nutritionals increased sales 12.2% (9% on a constant currency basis) and reported EBITA growth of 11.6% (8.1% constant currency). Glanbia Performance Nutrition delivered reported revenue growth of 7.6% (5.4% constant currency) and reported EBITA growth of 3.1% (0.2% constant currency). Group earnings increased 9.2% to €192.8m (£174.3m) in the half and total group profits rose 4.6% to €114.9m

MD Siobhán Talbot said: “Glanbia delivered a good performance in the first six months of 2017 with wholly owned revenues from continuing operations growing 7.3%, constant currency, when compared to the same period in 2016.

“The sale of 60% of Dairy Ireland and related assets was completed on 2 July 2017 and this business together with Glanbia Ingredients Ireland have formed a new joint venture named Glanbia Ireland.

“Glanbia Nutritionals and joint ventures were the main drivers of growth in the first half and we believe second half earnings progression will also be driven by Glanbia Performance Nutrition where good organic growth is expected for the remainder of the year.”

Shares in Glanbia slipped 0.5% to €17.27 as markets opened.

Hellenic Coke bottler Coca-Cola HBC (CCH) has reported a bullish performance in an “excellent” first half as revenues jump 5.6% to €3.2bn (£2.9bn). Volumes in the six months to 30 June rose 1.4%, with a 0.8% increase in established markets driven by a late Easter and warm weather in the second quarter. The group said its focus on value delivery through a combination of category and package mix improvements, as well as price increases, resulted in revenue per case growth of 4.3% on an FX-neutral basis, with all market segments improving. Underlying operating profits leapt 26.8% to €291.1m (£264m) as a result.

CEO Dimitris Lois added: “We are delighted to report an excellent set of results for the first half of the year, with volume and revenue per case growth in all three market segments.

“It is also very pleasing to see the revenue growth translating into significant margin expansion. This demonstrates that our strategy to exploit our lean asset base and improve profitability through operating leverage is powerful and delivers well.

“We are on track for broad-based revenue and margin growth for the full year with the organisation energised by the progress we are making towards our 2020 financial targets.”

Shares in the group have soared more than 9% to 2,589p on the back of the results so far today.

A string of acquisitions at drinks bottler Refresco (RFRG) has lifted revenues at the group in the second quarter and first half. Volumes increased 20.5% to 2.1 billion litres thanks to deals for Dutch beverage manufacturer DIS, a PepsiCo bottling plant in Hamburg and large scale US bottler Whitlock Packaging in 2016. Contract manufacturing volume also increased to 37.7% of total volume, mainly driven by the acquisitions. Revenues increased 15% to €643m (£581.4m) in the second quarter and by 15.8% in the half to €1bn (£904m). However, EBITDA was flat at €65m (£58.8m) for the quarter and €102m (92.2m) for the half.

CEO Hans Roelofs said: “In July we announced the acquisition of Cott’s bottling activities transforming Refresco into the world’s largest independent bottler. In combining the two companies we create nationwide coverage in the US – the largest single soft drinks market globally – while adding significant capacity and extending our broad product portfolio in the UK.

“This acquisition lies at the heart of our buy & build strategy and is a perfect fit with Refresco’s current activities. It taps into the expected private label growth in the US enabling us to support further growth of our core customers and it creates a US national platform for contract manufacturing.”

He added: “Looking back at the second quarter results we are pleased to report strong volume growth in Europe and the US driven by acquisitions and organic growth. On a like-for-like basis volume in retail brands remained stable and contract manufacturing for A-brands was up double digit.

“Gross profit margin per litre was in line with our expectations. Volume fluctuations in the quarter and significant start-up costs of recently installed production lines affected our results.”

Shares at Refresco slumped 5.6% to €16.59 on the flat profit figures.

Yesterday in the City

Premier Foods (PFD) ended yesterday down 0.4% to 39.3p despite early morning rises after it announced it had appointed a new chairman. Keith Hamill, an EasyJet non-exec and a former Travelodge chairman, will replace David Beever later this year.

London-listed European spirits producer Stock Spirits Group (STCK) soared almost 6% to 166.8p after it revealed its turnaround efforts had started bearing fruit. The Polish focused group revealed revenues rose 3.3% to €116m (£104.8m) in the six months to 30 June 2017, with operating profits up 32% to €16.5m (£14.9m).

Ahold Delhaize slipped 3.2% to €17.15 despite posting a 67.3% jump in net sales to €16.1bn (£14.5bn) and a 68.2% rise in to €355m (£320.7m), fuelled by last year’s €9.8bn merger.

It was a fairly quiet day on the markets for grocery/fmcg as the summer holidays continued in full swing.

Real Good Food (RGD) continued to make strong gains after its management shake-up, with shares up another 6.4% to 25p after a similar rise on Tuesday. The stock lost more than 30% of its value last week on a profits warning.

Elsewhere, the FTSE 100 slipped 0.7% to 7,498.06 points after president Trump promise of “fire and fury” against North Korea.

B&M European Value Retail (BME), Greencore (GNC) and TATE & Lyle (TATE) all rose, up 1.3% to 380.6p, 1% to 225.3p and 1% to 696p respectively.

Ocado (OCDO), Dairy Crest (DCG) and WH Smith (SMWH) all finished trading in the red, down 1% to 298.1p, 0.8% to 593p and 0.6% to 1,834p.

Coke bottler Coca-Cola HBC slipped 0.85 to 2,373p ahead of this morning’s interims.