Kerry Group’s big investment may not be paying off

Last week’s launch of the new Cheestrings production extension at the Kerry Dairy Ireland plant was the cumulation of a €30m investment in the facility by the company, aided by Government grants.

While the size of the investment is clearly substantial, it pales when compared to the amount of money its parent, Kerry Group, is spending on buying back its own shares.

The plc announced a €300m share buyback scheme in October of last year, which ran until April. At the end of that programme, Kerry announced it would spend another €300m buying its own shares between May and December this year.

In the seven weeks that programme has been running, the company has bought approximately €50m of its own shares in the stock market.

The problem for Kerry with the latest share buyback scheme is that even as they have bought shares, the price of those shares on the Dublin stock exchange has fallen (Figure 1).

Since Kerry plc started the initial buyback programme in November 2023, there has been a slightly better performance, with the share price rising by €2 from €73/share to €75/share (at the time of writing).

At the start of that buyback programme, Kerry had 177,131,119 ordinary shares outstanding. Multiplying that number by the price of shares at the time (€73), we get the stock market value of the company then was €12.93bn. At the end of trading on Monday 15 June, Kerry had 172,815,826 shares outstanding, valued at €75 each, giving the company a stock market value of €12.96bn.

With the stock market value pretty much unchanged, this means Kerry has spent (so far) €350m to add an extra €2 to the price of its shares.

Time will tell how much the next €250m of spending will help.