Irish food giant Kerry Group (KYGA) saw its profits pass €900m last year, but admitted its business in China faced severe pressure due to coronavirus.
The Richmond sausages producer posted a 9.6% increase in revenues to €7.2bn in the 2019 calendar year. Sales were underpinned by solid volume growth of 2.8% and a 4.7% boost from M&A, while pricing was flat.
Growth was primarily driven by its Taste & Nutrition division, which increased sales by 12.5% to €6bn via good volume growth in the Americas and a solid performance in Europe. Its Consumer Foods arm saw sales fall 2.4% to €1.3bn, reflecting volume decline of 2.2%, pricing decrease of 0.5% related to raw material pricing pass-through and market pricing. Nevertheless, Kerry said the division’s performance was “robust”. The increased sales helped group trading profit rise by 12.1% (9.5% in constant currency) to €903m.
On a call with analysts, Kerry warned its China revenue would fall 30% in the first quarter due to coronavirus, but said it expected its five Chinese factories would return to full capacity “within weeks”.
Investors shrugged off any China concerns by sending Kerry’s shares 4.5% higher on Tuesday to €122.30 and setting an all-time share price high of €126.50 on Wednesday.
Richard Flood, investment manager at Brewin Dolphin Ireland commented: “Kerry has once again served up a strong set of results, driven by its global food ingredients business, which continues to be the key engine of growth… While the impact of the coronavirus is a concern, Kerry has the firepower to deliver in challenging markets.”
Elsewhere, Asda parent Walmart (WMT) had a weaker than expected end to the year, with total revenues up 2.1% to $141.7bn compared with market expectations of 2.6% growth. Earnings were also under par, with Walmart pointing to a “softer” than anticipated Christmas season.
Asda had a similarly downbeat end to 2019, with like-for-like sales down 1.4% amid “strategic price investments” and discounting in clothing, which also hit margins at the grocery chain.
Retail analyst Nick Bubb summarised: “If Walmart is serious about floating off Asda next year, the calendar Q4 results were pretty uninspiring, even if the overall sales outcome wasn’t quite as bad as feared.”