Interim Financial Report of Kerry Group

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Finance and strategic development

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Introduction
The purpose of this report is to analyse the interim financial report of Kerry Group from
the director’s point of view. The motive is to discuss on the issues that are related with financial
as well as strategic performance of the company. Kerry Group is Ireland based public limited
company and this company deals in consumer food products. Initially Kerry group has been
founded as private limited company by the Listowel and other two founders. There are three
major shareholders in the company that holds all the shares of the company and they are divided
Dairy Disposal Company under state control (42.5% shareholding), farmer’s federation having
eight small farmers (42.5% shareholding) and lastly Erie Casein Company formed in United
States (15% of shareholding). After Kerry Group had been converted into public listed company
it got listed to London Stock Exchange and Dublin ISEQ. Kerry Group has expanded its business
in year 2004 and 2005 through making acquisition of two companies. In first quarter of year
2004, Kerry Group has brought Quest Food Ingredients Group for approximately 440 million
Euros and in year 2005. Kerry Group has acquired Noon Products for 124 million Euros. Noon
Products Company is main suppliers of company products in Indian as well as Thai market. As
this report is prepared from director’s point of view it is important that all strategic decision
taken by the company must be evaluated and their financial consequences must be drawn in
order to get complete understanding of interim performance of the company.
Interim management report of Kerry Group for year 2016 aims to review the company
strategy, revenues, earnings, trading profits, trading margins, finance cost, capital expenditures,
debt holding, tax impact, cash flows, and other financial information that has impact over the
future performance of the company. The report has been divided into three parts, review of
business operations, financial performance overview, and future prospects of the business. As
per information presented in interim management report there are many issues that Kerry Group
has to face in future years. The projections proposed in the interim management report can be
influenced by macro economic conditions, food industry demand and supply issues, fluctuations
due to foreign exchange transactions and change in prices of raw material and commodity
fluctuations. This report will lay emphasis on the issues which are relevant form the point of
view of directors. The methods used to examine the interim performance of Kerry Group are
ratio analysis and trend analysis.
Financial and Strategic Management Issues of Kerry Group
Interim management report is mainly developed to improve the level of communication
between management, shareholders and directors of the company. The motive of the interim
prepared by Kerry Group is to reflect the efficiency and integrity of various management groups
within the company such as financial management, sales management and strategic management.
The directors are in concern with the future performance of the company and they want to review
the interim management report to the future growth of the company. The data presented in the
interim management report is of period of 9 months and report is prepared to focus on the actual

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performance during the period. The interim financial information is not audited as it is not the
final statement of the company. Interim report provides mid-year performance of the company so
that shareholder can be aware about the performance of the company and if any issues are found
management can take proper steps to solve the issues.
The company is mainly involved in providing dairy products, meat products and meal
solutions to wide number of people with the objective of providing healthy and hygienic food to
them. The company has attained a position of being a global leader in providing quality food and
beverage products at affordable prices. It conducts its business operations mainly in countries
such as America, Asia-Pacific, Middle East and Africa. However, the major strategic issue that
has been faced by the company as analyzed from its Interim Management Report of the year
2016 that its business expansion in EMEA countries such as Europe, Middle East and Africa has
been slower as compared with that of Asia-Pacific countries. For example, it has been depicted
in its interim management report that its business has depicted a growth of about 10% in Asia-
Pacific countries whereas in America it has recorded a growth of about 4% in the year 2016. This
is mainly due to large-scale growth in the lifestyle nutrition products across these countries and
therefore causing increased demand of food products manufactured by Kerry Group. As such,
the major challenge that is present before the Kerry Group is to seek innovative solutions for
meeting the varying customer requirements across the EEA countries and thus enhancing the
demand of its food ingredients within these countries (Interim Management Report 2016).
The interim management report of the company has also highlighted the major challenges
that the company can face are developing food products with unique taste and nutrition for
meeting the changing customer needs and expectations at an international level. In this context,
the company is striving to adopt the use of latest technologies for producing food ingredients that
matches the customer requirements. In addition to this, the expansion and growth of its business
at an international level may be impacted by the regulatory changes that can negatively impact
the sale of its food products across the countries at a global level. As such, the company is taking
active measures to comply with all the regulatory requirements at an early stage in the product
development process. It is fostering food and beverage innovations for satisfying regulatory
requirements and reducing launch time to bring new food ingredients within the market (Interim
Management Report 2016).
The Interim Management Report of the company published in the year 2016 has shown
that its financial performance in the year 2016 has been improved as compared with that of the
financial year 2015. Its strong financial performance in the year 2016 has added to its global
leadership as a supplier of customer branded food to the Irish and other international markets. Its
market value has been strengthened in the year 2016 as compared with that of year 2015 as the
company EPS has improved from 7.5% to 133.8 cent and its interim dividend has been increased
from 12% to 16.8 cent per share. In addition to this, its revenue has also depicted an increase of
about 22 million Euros in the year 2016 as compared with the year of 2015. The trading profit
has also been improved from 300 million Euros to about 322 million Euros between the financial