Kerry Group has upgraded its profit outlook for 2018 due to positive momentum in the business in the first half of the year and now expects to achieve growth in adjusted earnings per share of 7% to 10%. The previous guidance had been for growth of 6% to 10%.

Releasing half-year financial results on Thursday morning, Kerry also announced a 12% increase in its interim dividend to 21c per share. Overall, Kerry Group reported a 1.4% increase in half-year revenues to €3.2bn, as strong sales volume growth of 3.6% and the positive contribution from acquisitions of 3.9% more than offset negative currency translations of 6.7%.

Trading margins in the business narrowed slightly during the period from 10.6% to 10.5%, which Kerry attributed to the weakness in sterling. Adjusted earnings per share for the first half of the year increased by 9% to 144.2c per share.

Kerry Group said it spent just over €120m on four acquisitions and entered into a joint venture. The group remains quite lowly borrowed with net debts at the end of June 2018 standing at €1.4bn, or just 1.5 times' earnings (EBITDA).

“Evolving consumer trends and the changing marketplace have provided increased opportunities and demand for Kerry’s industry-leading RD&A and broad technology portfolio. This, along with the group’s enhanced end-use market focus, drove healthy volume growth and underlying margin expansion in the first half of 2018,” said Kerry Group chief executive Edmond Scanlon.

By division

Taste and nutrition

Sales in Kerry’s taste and nutrition division increased 4.1% in the first half of the year to reach €2.6bn, while trading margins expanded from 13% to 13.1%. The business recorded steady sales volume growth of 2.8% in its Americas region. However, this volume growth was more than offset by negative currency headwinds with reported revenues for the Americas division down just over 2% year on year to €1.3bn.

In Europe, Kerry reported volume growth of 2.7%, with sales increasing 3% to reach €700m. This was driven by strong growth in foodservice.

In its Asia-Pacific Middle East and Africa (APMEA) division, Kerry continues to enjoy double-digit sales growth above 10%. APEA accounted for €537m in sales in the first half of the year.

Consumer foods

Kerry’s consumer foods division reported sales growth of 1.2% to €685m in the first half of the year. Kerry said volume growth of 1.3%, a 0.9% increase in pricing and the contribution of acquisitions, more than offset some negative currency headwinds, principally related to a weak sterling.

However, trading margins in the business narrowed from 7.6% to 7% as a result of the weaker sterling.

Kerry said changing consumer behaviour in the UK and Ireland, as well as a shifting retail landscape, continue to drive intense competition in the marketplace. It added that discounter chains continue to gain market share, with retailers now focusing more on range simplification, customer brands and everyday low-pricing strategies.