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.
Kerry optimistic despite competition referral (16 July 2011)
Price hikes prompt Competition Commission referral for Kerry-Headland tie-up (12 July 2011)