Kerry Group has reported a fall in trading margins due to a lag in recovering soaring input costs from customers.

In its interim management report, published this morning, Kerry unveiled an 8.4% like-for-like rise in sales across the group to €2.6bn (£2.29bn). Pre-tax profit also increased by 8%, to €175m.

Despite a 6.1% increase in trading profits, to €214m, group trading margin fell 30 bps which Kerry blamed on a lag in cost recovery “due to the competitiveness of the UK and Irish consumer foods sectors”.

In its consumer foods division – which includes the Cheestrings (pictured), Richmond, Walls and Mattesons brands, as well as its retailer own-label business – revenue climbed 5.3% to €944m, with trading profits up 6%.

All chilled brands grew market share over the six-month period and in chilled ready meals, Kerry performed ahead of market growth. Frozen ready meals had stabilised.

Headland Foods – acquired in January in a deal referred to the Competition Commission last month – was “performing in line with expectations,” according to the report.

“The group remains confident of achieving its growth targets for the full year,” said Kerry chief executive Stan McCarthy.

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Price hikes prompt Competition Commission referral for Kerry-Headland tie-up (12 July 2011)