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Kerry Group PLC on Wednesday reported higher profit in the first half of 2023, partly thanks to price increases, but it forecast a slowdown in adjusted earnings per share growth.
The Tralee, Ireland-based food ingredients maker said pretax profit in the first six months of the year jumped 57% to €357.9 million from €227.6 million a year prior.
Revenue rose 1.6% to €4.12 billion from €4.06 billion. Kerry’s largest unit Taste & Nutrition led with a 2.7% increase in revenue to €3.54 billion, for which the company cited volume growth and price hikes.
Adjusted pretax profit rose more modestly than statutory, by 2.1% to £365.2 million from £357.7 million. This is due to statutory figures including a net non-trading items credit of €65.0 million in the first half of 2023, compared to a €62.1 million charge a year prior.
The credit in the first half primarily related to the gain on the €500 million disposal of Kerry’s Sweet Ingredients division in March to Advent International’s portfolio company IRCA.
The charge in the first half of financial 2022 primary related to impairment costs of the disposal of operations in Russia and Belarus, undertaken due to the invasion of Ukraine. The charge also related to the company’s ‘accelerate operational excellence’ restructuring programme, which is set to run until 2024.
Over the programme’s period, which started in 2022 and ends in 2024, Kerry will make an investment of around €120 million, which it expects to deliver an annual recurring benefit of €70 million per year from 2025 onwards.
Earnings before interest, tax, depreciation and amortisation margin declined to 12.6% in the recent half-year from 12.8%. The return on average capital employed reduced to 10.1% from 10.2%.
Kerry declared an interim dividend per share of 34.6 euro cents, up 10% from 31.4 cents a year prior.
Looking ahead, the company said: ‘While market conditions remain uncertain, Kerry remains strongly positioned for growth with a good innovation pipeline.’
Adjusted earnings per share on a constant currency basis in the first half of 2023 rose by 2.1% to 180.0 euro cents from 176.4 cents a year prior.
The company expects adjusted EPS growth in 2023 of 1% to 5% on a constant currency basis, slowing from 7.3% in 2022, when adjusted EPS was 440.6 euro cents.
Kerry shares lost 1.1% to €89.72 each on Wednesday morning in London.
Kerry on Tuesday had announced the purchase of Shanghai Greatang Orchard Food Co Ltd for an initial ¥720 million, about €91 million, with additional payments based on performance of up to ¥780 million. The move is intended to grow Kerry’s position in the ‘significant foodservice hotpot market’ in China.
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