Kerry doesn't tend to disappoint and yesterday was no exception as the company's 2002 results met market expectations and it repeated its earnings guidance for the current year.
But if the Tralee-based food group is to maintain its 17-year track record of double-digit earnings growth, it will have to remain active on the acquisition front.
The company seems set to continue with the small to medium-sized bolt-on acquisitions, which have been a feature of the past two years, until something larger surfaces.
"You could waste your day and your time waiting for the grand finale to come along," says Kerry managing director Mr Hugh Friel. "But you've got to keep growing the business and taking every opportunity that comes along."
Kerry already claims to be the world leader in application-specific ingredients, while it is the leading supplier of chilled foods in the Irish and British markets.
However, it is in the flavours business that it still has some work to do to build a world-class business. "We are not number one in the flavours business but we are building toward that. It will take time and effort but we have made significant progress from a standing start in 1998," Mr Friel says.
He notes that while the $6 billion (€5.6 billion) flavours business is dominated by eight main players, a third of it remains very fragmented.
"There are opportunities there. We have to be patient in this regard and keep working at it."
Kerry believes that, all going well, it should be able to deliver the same kind of acquisition spending in the current year as last year, when it spent €273 million on 12 small to medium-sized acquisitions.
Mr Friel said acquisition opportunities in the US continue to surface but the company remains adamant that it won't overpay.
Of Haarman & Reimer, the Bayer flavours and fragrances unit for which Kerry was widely expected to bid last year, Mr Friel notes that "not all of it fitted and that was the problem. Around 37 per cent of its turnover was a perfect fit for Kerry. But if you pay a high price and then have to dispose of businesses, the numbers may not add up."
The $68 million acquisition of SunPure, a Florida-based manufacturer of natural citrus flavours and ingredients, marks the first acquisition this year and represents another step in building the flavours business.
"They have quite serious ambitions for the flavours division. They are not a Givaudan or an IFF but they are intent on getting there," one analyst said. -
Jane O'Sullivan
