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Kerry unfazed by currency headwinds

Tuesday, February 26 11:36:18

Irish food group Kerry said its restructuring programme would allow earnings growth to remain steady in 2013, despite a stronger euro and higher raw material costs squeezing margins in the first two months of the year.

Ireland's third-biggest listed company said today adjusted earnings per share rose 11.3 percent to 2.37 euros in 2012, at the top end its own forecast range and ahead of an average estimate of 10.1 percent growth in a in a Thomson Reuters I/B/E/S poll.

The company, which makes Wall's sausages and Cheesestrings snacks, said it expected EPS growth of between 7 and 11 percent in 2013, slightly ahead of its forecast at the same time in 2012.

"There is uncertainty about consumer demand, costs on the raw material front (and) currencies are pretty negative at this point," Chief Financial officer Brian Mehigan said. "But we're pretty confident going into 2013 about continuing our performance."

Kerry expects raw material costs to ease in the second half of the year, while improvements from the company's KerryConnect restructuring programme will help make up for any currency volatility, Mehigan said.

Its revenue grew 10.3 percent to 5.8 billion euros in 2012, in line with analysts' forecasts.

Kerry earns about two-thirds of its revenue from its ingredients and flavours business and about one-third from its consumer foods division.

The company, whose share price rose 42 percent in 2012, has underperformed in the year so far due to the strength of the euro against the dollar. It has climbed 3.2 percent since the start of the year, compared to 8.8 percent for the broader Irish market.