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Kerry Group Sustains Business Margin Expansion

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Kerry Group Sustains Business Margin Expansion

Kerry Group Sustains Business Margin Expansion
February 22
14:58 2017

Kerry Group, the global taste & nutrition and consumer foods group, has reported a 0.4% increase in revenue to €6.1 billion for the year ended 31 December 2016 reflecting good volume growth offset by significant adverse currency movements and lower pricing, as group trading profit increased by 7.1% to €749.6 million and group trading margin increased by 70 basis points to 12.2%.

Kerry’s Taste & Nutrition business, which accounted for 79% of group revenue and 86% of group trading profit in 2016, reported a 3.5% increased in revenue to €4.9 billion with volumes up by 4.0% but product pricing decreased by 2.1%, and there was a negative transaction related currency impact of 0.1%. Trading profit grew by 8.1% to €716 million, reflecting a 60 basis points improvement in divisional trading margin to 14.7%.

Kerry’s Consumer Foods business reported a 9.7% decline in revenue to €1.33 billion due to adverse currency movements in 2016 and the disposal of non-core businesses net of acquisitions in 2015. Volumes grew by 2.1% and net pricing decreased by 2% in 2016. Business efficiency improvements and the improved quality of Kerry Foods’ portfolio contributed a 30 basis points increase in divisional trading margin to 8.8%. However, the underlying trading profit improvement was more than offset by the adverse currency movement and the business disposals resulting in a trading profit decrease of 6.7% to €117 million.

Kerry Group’s success has been built on a total commitment to ongoing technological innovation in all sectors of its business.

Kerry Group’s success has been built on a total commitment to ongoing technological innovation in all sectors of its business, providing integrated customer-focused product development. The group invests heavily in highly specialised research, development and application centres of excellence. This gives Kerry a ‘technological edge’ in its chosen sectors, allowing it to proactively meet customer and market needs.

Kerry Group’s recent investments in its global, regional and in-market Technology & Innovation Centre network and Commercial/Application facilities, coupled with a significant increase in RD&A expenditure in Taste & Nutrition to 5.1% of divisional revenue in 2016, contributed to increased customer engagement and innovation activity.

The 2016 performance was also assisted by businesses acquired in 2015 which provided a strong platform for international market development. During the year Kerry Group completed two bolt-on acquisitions – Jungjin Foods in South Korea and Vendin in Spain – so establishing manufacturing bases in two new geographies.

Stan McCarthy, chief executive of Kerry Group, says: “In 2016 Kerry delivered good volume growth and a strong financial performance including sustained business margin expansion, record free cash generation and 7.1% growth in adjusted earnings per share. The group remains confident of its ability to sustain profitable growth throughout global markets. In 2017 we expect to achieve good revenue growth and 5% to 9% growth in adjusted earnings per share.”

Stan McCarthy (pictured above on right), who became chief executive of in January 2008, will retire from this position on 30 September 2017 and as a director of the group at year-end. He will be replaced as chief executive by Edmond Scanlon (pictured above on left), who is currently president and chief executive of Kerry Asia Pacific.

Edmond Scanlon joined Kerry’s Graduate Development Programme in 1996 and worked in Finance until his appointment as vice president Finance, Supply Chain and Operations of Kerry’s Global Flavours Division in 2004. In 2007, he was appointed vice president Mergers & Acquisitions, Kerry Americas region, before being appointed global president Kerry Functional Ingredients & Actives in late 2008. In 2012, he was appointed president of Kerry China, prior to being appointed to his current position as in November 2013.

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