Kerry says future of dairy arm remains ‘under review’

Kerry Group shares closed up yesterday after the group said it expects to achieve earnings per share growth of up to 15pc this year following “good business momentum” in the first three months of 2021.

Its annual general meeting was held remotely and offered shareholders, including farmers, little chance to interact with the board.

However, the vexed question around a stalled plan to spin out the group’s stake in its dairy production arm into a joint venture with farmers through Kerry Co-op was raised.

Kerry CEO Edmond Scanlon said it would be inappropriate to comment beyond an announcement on April 15 that the deal was off and talks with the Co-op were over.

It is understood talks with the Co-op ended over what Kerry Group management regard as a too low offer for the dairy unit and have not resumed.

Kerry Group said a strategic review of the dairy-related businesses in Ireland and the UK is ongoing, language that suggests it will look to sell. Management also hinted at possible acquisitions, saying they were continuing to pursue “M&A opportunities aligned to our strategic growth priorities”.

Meanwhile, dairy suppliers were told this week that a commitment from Kerry to pay a ‘leading milk price’ will end in 2026.

Overall, the group reported business volume growth of 1.9pc during the period.

The performance was due to strong growth in retail sales, according to a trading update.

However, the foodservice channel continued to be impacted by increased restrictions in a number of local markets, before it returned to growth last month.

Edmond Scanlon, CEO of Kerry Group, said: “The good business momentum has been supported by an increase in the level of innovation in a number of key markets.”

He added that this momentum, along with an improvement in market conditions, has given the company increased confidence in its full year outlook. Kerry Group now expected to achieve “strong volume growth and are guiding adjusted earnings per share growth of 11- 15pc in constant currency”, Mr Scanlon said.

Kerry’s Taste & Nutrition division recorded growth of 2pc, while its Consumer Foods division reported volume growth of 1pc, led by “strong growth” in meat snacking.

At the end of March Kerry’s net debt decreased slightly to €1.9bn. The company said its balance sheet “remains strong which will facilitate the continued organic and acquisitive growth of group businesses”.

Meanwhile, agri-investment company Donegal Investment Group has reported revenue of €26.4m in the six months to February 28, down 11pc on the corresponding period last year.

The company said Covid-19 restrictions were continuing to impact demand in its speciality dairy business, while pricing in its seed potato business was marginally down on the prior year.

Nonetheless, profit after tax was €2.5m, an increase of €1.1m on the prior year, according to interim results from the group.