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Kerry Sees Profits Rise

26 August 2013

IRELAND – Irish based food meat processing and ingredients company Kerry Group achieved a strong financial performance in the first half of 2013.

Results across the core ingredients and flavours and consumer foods business segments were very encouraging against the backdrop of a relatively sluggish overall market environment ? particularly in developed markets, the company said.

Solid growth and business development continued in the Group’s developing markets.

Kerry’s broad ingredients and flavours technology base, supported by industry leading innovation enabled through the Group’s Global Technology and Innovation Centres, continued to capitalise on added value growth opportunities and demand for enhanced nutritional and taste solutions.

Positive margin momentum was also assisted through the ongoing 1 Kerry Business

Transformation Programmes.

In the Group’s Irish and UK consumer foods’ businesses, the ongoing refocusing by the division on its core branded and customer branded offerings has achieved satisfactory results to date – despite the prevailing competitive, value driven market environment.

Group sales revenue increased by 1.1 per cent to €2.9 billion.

Continuing business volumes increased by 2.7 per cent and pricing increased by 1.8 per cent − broadly offsetting input cost inflation of approximately four per cent.

Volume growth and trading performance in ingredients and flavours’ markets improved in the second quarter of the year compared to the first quarter, which was hit by an increase in customer inventories in the final quarter of 2012.

Ingredients and Flavours continuing business volumes increased by 3.9 per cent compared to the first half of 2012 and pricing increased by two per cent.

Continuing business volumes in Kerry Foods decreased by 0.3 per cent and pricing increased by 1.2 per cent relative to the same period in 2012.

Group trading profit increased by 9.8 per cent to €267m.

Ongoing added value business development which is improving product mix, coupled with the benefits accruing through the 1 Kerry Business Transformation Programmes and the positive impact from exiting non-core business activities, contributed to a 70 basis points improvement in the Group trading profit margin to nine per cent.

This reflects an 80 basis points improvement in trading margin in Ingredients and Flavours to 11.1 per cent and a 30 basis points improvement in Consumer Foods’ margin to 7.7 per cent.

Adjusted profit before tax, brand related intangible asset amortisation and non-trading items increased by 10.2 per cent to €225.2million.

The income statement charge arising from investment in the EMEA Global Technology & Innovation Centre, integration of acquisitions, restructuring /

reorganisation costs and loss on disposal of non-current assets/businesses amounted to €66.1million (net of tax) resulting in a net cash outflow of €12.3 million after tax.

Adjusted profit after tax before brand related intangible asset amortisation and non-trading items increased 11.7 per cent to €191 million.

Adjusted earnings per share increased 11.7 per cent to 108.9 cent (2012 : 97.5 cent).

The interim dividend of 12 cent per share represents an increase of 11.1 per cent over the 2012 interim dividend.

Commenting on the results Kerry Group Chief Executive Stan McCarthy said: “The Group achieved a strong financial performance in the first half of 2013 and continued to invest in enhancing the quality of our businesses.

“Adjusted earnings per share in the period increased by 11.7 per cent to 108.9 cent.

“Our global ingredients and flavours technologies and core consumer foods businesses are performing well.

“We remain confident of achieving our growth targets for the full year and delivering seven per cent to 11 per cent growth in adjusted earnings per share to a range of 250 to 260 cent per share.”

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