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Kerry Group Full-Year Results – What The Analysts Said

Irish food business Kerry Group has reported revenue of €7.0 billion for full-year 2020, with volumes down 2.9% for the year.

Commenting on the group's performance, Edmond Scanlon, Kerry Group chief executive said, "While uncertainty from COVID-19 continues to impact our customers, consumers and industry, we will continue to co-create with our customers to meet accelerating consumer demands, and look forward to a year of strong recovery and good growth.”

Here's how leading industry analysts viewed its performance:

Cathal Kenny, Davy

"Kerry’s FY20 results bookend an unprecedented period for the group. Headline forecasts were in line with our forecasts, with the Taste & Nutrition (T&N) division returning to volume growth in Q4. For T&N, FY21 will be about margin rebuild and revenue recovery in the Foodservice channel.

"We anticipate a modest (2-3%) downward adjustment to our FY21 EPS forecasts – primarily FX related. The current crisis has placed a greater emphasis on supply chain responsiveness, toolkits and agility – as such, we expect Kerry to emerge with enhanced relevancy."

Jason Molins, Goodbody

"Kerry has reported a robust FY20 performance, following a solid Q4 outcome, helping to achieve an EPS outcome of 345.4c which is broadly in-line with forecast. This represents a 9.4% decline on a constant currency basis, compared to guidance of 8-11%.

"The Taste & Nutrition (T&N) division returned to volume growth in Q4 (+0.7%) with FY volumes declining 3%. T&N margins were 10bps ahead of forecast at 14.2% (-110bps yoy). The Consumer Foods division underlying FY volumes (ex. ready meal contract loss) were up 2.2% which implies a strong Q4 performance of +8.8%. Margins were broadly in-line with forecast at 7.8% (+20bps yoy). The Group also announced that it is conducting a strategic review of its dairy-related businesses in Ireland and the UK.

"In terms of outlook, T&N growth prospects remains strong in the retail channel, while foodservice is expected to see a continued recovery. Overall T&N volumes are expected to be flat to positive volume growth in Q1, with a strong recovery and good growth in the FY21. Consumer foods is expected to deliver good growth underpinned by innovation."

Seaspray Financial

"Kerry Group released a trading update this morning before market open, in which CEO Edmond Scanlon said annual group revenue came to about €7 billion vs 2019's €7.2 billion. The chief executive also alluded to the fact that Kerry will undertake a strategic review of its dairy business in the UK and Ireland, which could lead to a transaction in the coming months.

"The shares, which are over 2% higher this morning following this latest release, did see heightened volatility last week as a piece emerged from Ontake Research, which questioned Kerry's acquisition policy and its methods of accounting for those acquisitions. This was countered by Kerry Group, who pointed to the fact that the report had errors and inaccuracies, causing the shares to recover some of their lost ground.

"Kerry Group's stock has depreciated by over 6% YTD 2021, nearly undoing all of 2020's gains. With its dividend yield of 0.75% at current levels, and P/E of over 30 times, we remain neutral with regard to this particular name for now."

© 2021 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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