Financial and Strategic Management Issues of Kerry Group

This report examines the financial and strategic management issues of Kerry Group, a public limited corporation in Ireland. It analyzes the company's interim financial performance, strategic decisions, and their financial implications. The report also discusses the challenges and opportunities faced by Kerry Group in the market.

UU-MBA 710:
FINANCE &
STRATEGIC
MANAGEMENT

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Financial and Strategic Management Issues of Kerry Group......................................................4
RECOMMENDATION...................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The aim of this report is to examine from the director's point of view the interim financial
performance of the Kerry Company. The reason is to address concerns related to the company's
financial and strategic results. The Kerry Group is a public limited corporation headquartered in
Ireland and is responsible for consumer food goods. The group Kerry is initially established by
the Listowel and two other entrepreneurs as a private limited company. Three main shareholders
hold all the company's stock and are split into the State-owned Dairy Disposal Corporation
(42.5% shareholdings), the Farmer's Union of eight smallholder farmers (42.5% shareholdings),
and finally Erie Casein Business (15% shareholdings).). The group is listed on the London Stock
Exchange and Ireland in the following years: after Kerry Group became turned into a publicly-
owned business. The Kerry Group increased its operations in 2004 and 2005 by acquiring two
companies (About interim report of Kerry plc, 2016). The Kerry Group received approximately
EUR 440 million in the first quarter of 2004 for Search Food Ingredients Category and 2005
(About interim report of Kerry plc, 2016). For 124 million Euros, Kerry Group has acquired
Noon Products. The business Noon Products is the leading suppliers of Indian and Thai goods.
Since this report is produced from the viewpoint of the managing director, it is necessary to
analyze all of the company's strategic decisions and draw their financial implications in the
interests of full awareness of the company's preliminary results.
Kerry Group's 2016 interim management report is directed at evaluating the policy of the firm,
sales, profits, operating income, profit margins, financing expenses, spending on property, debt
keeping, tax implications, cash flows, and other financial details that has an effect on potential
success of the business. The report consists of three sections, company activity analysis, an
summary of financial success and potential market prospects. As per details in the interim report,
Kerry Group may face several challenges in the years to come. Macroeconomic conditions, food
market demand and supply issues, volatility in foreign exchange movements, and price
differences in raw materials and product volatility will influence the forecasts presented in the
provisional management report. The report will concentrate on the related concerns from the

Directors' standpoint. Ratio analysis and pattern analysis are the methodologies used to assess
Kerry Group's interim results (Kölbel, Busch and Jancso, 2017).
MAIN BODY
Financial and Strategic Management Issues of Kerry Group
The key aim of the interim management report is to improve communication with the
board, shareholders and managers of the business. The reason for Kerry Group's interim
development is to demonstrate the credibility and reputation of the different management
divisions, such as financial management, sales management and strategic management. The
managers consider the company's potential success and want the interim management report to
be reviewed with respect to the company's future progress (Böhm, Eggert and Thiesbrummel,
2017). The data contained in the interim management report is 9 months long and will reflect on
the overall results during the time span. The preliminary financial report is not audited, because
it is not the company's final statement. The mid-year report provides the organization with a
perspective for shareholders to recognize the business's results so management will take effective
action to address the issues if any issues are found (Karna, Richter and Riesenkampff, 2016).
The organization provides dairy products, poultry items and food options for a wide
range of customers in order to supply them with safe and hygienic food. By offering premium
food and beverage goods at inexpensive demand, the organization has become a world leader. It
works primarily in the United States, Asia-Pacific, the Middle East and Africa. However, as the
company's Interim Management Report of the year 2016 stated, the key competitive concern has
been that the company's market growth is slower than in Asia Pacific in EMEA countries like
Europe, the Middle East and Africa. For example, its interim management report reveals that its
business in Asia and the Pacific has experienced growth of around 10%, while in America; its
growth in 2016 was about 4% (About interim report of Kerry plc, 2016). It is largely attributed to
strong increases of lifestyle nutrition items in these countries and therefore to the growing need
for Kerry Group food products. In order to satisfy the different consumer requirements in EEA
countries, the key obstacle faced by Kerry Group is to search into innovative ways to raise the

demands of its food ingredients in these nations. The interim report is designed to increase the
degree of cooperation between the organization and the public, i.e. stakeholders. This study
reveals that internal management processes (financial management, strategic management, sales
management) have quality and honesty (Chung and Kuo, 2018). This report reinforces the public
partnership required to smooth the road to the growth of the business. A paragraph detailing
client results in the middle of the years or for the less than 12 months is contained in the Kerry
Group's annual financial statements. Interim declarations are not an audited document since they
are not the company's full document.
The company's interim management report has also underlined the key obstacles
confronting the organization in producing food products with a unique taste and quality that
satisfy the rising demands and preferences of its consumers at an international level. During this
context, the company seeks to use the latest technology to produce food ingredients to meet the
requirements of the consumer. In addition, the international development and growth of its
industry may be affected by the legislative developments which may adversely impact the
worldwide selling of its food products. Therefore, the organization takes active measures from an
early point in the product production phase to conform to all regulatory requirements. It
promotes creativity in food and beverages to satisfy regulatory criteria and lowers launch period
to bring new product ingredients into the market. The company's Interim Management Report
published in 2016 showed that its financial results in 2016 improved relative to that of 2015. The
good financial success as a supplier of supermarket packaged products in Irish and other foreign
markets contributed in 2016 to its strategic leadership. Its market cap was raised by 7.5 percent
in 2016 to 133.8 percent and its interim dividend rose from 12 to 16.8 cents a share in 2015, as
contrasted with that of 2015 (About interim report of Kerry plc, 2016). Moreover, its sales
reported a rise of nearly €22 million in 2016 relative to the year 2015. The economic income
between 2015 and 2016 was also increased from EUR 300 million to around EUR 322 million.
Despite the market and currency fluctuations, the group reported a increase in financial results in
2016 compared with 2015. The same can also be seen as follows from the company's interim
management report:
The company's cash inflows in 2016 have also risen by about EUR 143 million, compared with
those in 2015. This is mostly because the company's capital expenses are lowered by nearly 57

million Euros and its cash inflows increased (About interim report of Kerry plc, 2016). In its key
industries, such as taste and diet and consumer goods, the business has expanded. The
organization is known for the market success in the diet divisions of its snack products and meal
solution. Growth of the company in its different food divisions has offset some adverse impacts
owing to price uncertainty and currency movements on financial results. Through satisfying the
local consumers 'taste desires and enhancing their food ingredients' nutritional quality through
the use of advanced technologies; it accomplished a rise in its food items. The company reported
a 3.7 percent rise in trade income over the period 2015-2016, primarily because of ongoing
productive projects and the substitution of its portfolio (Atmadja and Saputra, 2018).
The interim report of the firm also examined the incremental decline in its return on
average equities (ROAE) from 18 to 16.8 percent in 2015-2016. This small decline in the
company's productivity can be partly attributed to variations in the exchange rate. For the 2016
fiscal year, though, the company's cash flow return on investment (CFROI) rose to some 14.5%.
This indicates that the company's cash flow has improved largely because of rising revenue and
corporate gains.
In order to compete and retain its market expansion, the organization has introduced
improvements in the sector of food and beverage. The constantly seeks to provide his clients
worldwide with fresh and safe food and therefore makes the point of supplying them with
balanced food without losing consistency. The company's strategic expansion plans include the
usage of technologies including e-commerce, targeted at increasing access for global consumers.
It also develops broad visibility into its consumers' needs and desires to successfully satisfy their
expectations and specifications. Kerry Group has noticed that customers globally are constantly
conscious of safety and therefore have adopted nutritional and tasteful approaches for producing
nutritious goods. It has also strengthened its development capability to better satisfy the demands
of global customers. The consumers' appetite for nutritious food is satisfied by ongoing
expenditure in research and development programs to produce innovative and diversified food
and beverage items (Kwon, Kim and Martin, 2016).
The Company's 2016 Interim Management Report specifically shows that financial
performance has strengthened compared with the 2015 Interim Management Report. The
development of the organization in the Asia-Pacific area in its separate market divisions of the

taste and diet and consumer product sector is key. Kerry Group's general manager takes
aggressive steps to address market price issues and growing consumer desires. They have taken
the chance to grow the market to satisfy the consumer demands for tasty and healthy products
effectively. The interim management report of the group has examined the problems confronting
the organization to satisfy consumer requirements in the EMEA countries (About interim report
of Kerry plc, 2016). The corporation is also currently designing plans to support its corporate
development in these nations. This will require work to gain an insight into the tastes and desires
of consumers and to continually accelerate product creativity to maximize savings volume in
these regions.
In order to increase profitability and growth in EMEA regions, the business develops innovative
products which satisfy nutritious and all other technological, functions and regulatory
requirements. The business has the ability to achieve greater foreign growth and development,
primarily due to its effective acquisition and international trade. However, the innovative product
style and consistency also allows it to grow internationally by successfully meeting consumers'
tastes and desires. In addition, the business has purchased clean labeling of its e-mail products
and bakery products which resulted in an increase in its worldwide sales volume. With its nice
innovations, it has achieved success in the Indian and meat industries in Australia and New
Zealand. Snacking allowed Malaysia to expand and the growth in South Korea was guided by the
acquisition of Jungjin fruit. However, Brexit is the big risk confronting the group, which may
have adverse implications for sustainable development in EMEA countries (The impact of Brexit
on Kerry Group. 2017). The UK's departure from the EU may have a detrimental effect on the
company's financial results. It can limit trading of food items in the United Kingdom and Ireland.
In this sense, active steps must be taken by the organization to improve its logistics network and
establish new routes for the transport of food items between the United Kingdom and Ireland. As
such it aims to introduce transport routes for périshable goods in the United Kingdom and
Ireland.
Analysis of the 2016 Kerry Group interim management report shows that it handles the strategic
and financial challenges correctly. Kerry Group's market model is resilient and is well equipped
to adapt to the uncertainties of currency volatility and increasing consumer requirements. The
company's takeover in 2015 has culminated in an improvement in its financial results. The

company's actions, such as e-commerce, electronic delivery and technical technology
development, would also lead to the successful continuation of its industry at a global level
(Honggowati, Aryani and Probohudono, 2017).
RECOMMENDATION
Based on a comprehensive analysis of Kerry Group's interim management report,
managers and directors are advised to enhance their performance and financial power. According
to the details presented in the Kerry Group interim management report for 2016, the organization
exceeded the competitive business condition. This was found that Kerry Group had endured too
many external influences as a consequence of the financial growth goal. It can also be assumed
that external influences are the key concerns Kerry Group will tackle to boost both financial
results and strategic success further. The main focus of the recommendations is the enhancement
of the development cycle, brand recognition, product growth and quality assurance. The delivery
process should also be oriented as a means of ensuring the full satisfaction of consumers that is
essential to the company's development. With the aim to grow our market in EMEA and the Asia
Pacific, the Kerry Group wants to develop a solid logistics network and after sales infrastructure
to provide its consumers with quality goods and services. Kerry Group is part of the consumer
food sector which wants a good commodity of high quality and good shell existence as goods are
eaten only a few days after they have been packed and shipped to consumers. Some
recommendations for Kerry Community have been gathered below to expand and prosper in the
extremely competitive marketplace. If the Kerry Group successfully follows these
recommendations, the organization will further improve its competitive success and financial
results. Below are some of the recommendations which Kerry Group will take charge of:
 In any production area there is a need to set up top quality assurance department so that
the business can guarantee better goods. Although quality is the responsibility of the
manufacturer, the exclusive quality management service would help to increase the
output and decrease product distribution time.
 For these big organizations, staff preparation is the main aspect, so it is very necessary to
provide workers with timely preparation.

 Because of effects of Brexit several issues need to be dealt with successfully by the
business. It is necessary for the Kerry Group to establish the Ireland-UK trade path. The
factory to be built in the UK must therefore be designed as early as possible and run
within a very limited period of time. England is Kerry's biggest sector that doesn't have to
go comfortably. Any focus must therefore remain on the UK market.
 As the Kerry Group produces the food goods, the correct hygiene inspection system is
important in order to provide consumers clean and healthy food. Natural colors and
helpful preservatives can also be used to preserve high quality items.
 In order to ensure the health and efficiency of staff, procedures such as flavoring,
extraction, distillation and fermentation must be carefully controlled.
 Kerry Group wants to better evaluate the sector and to prepare for the business in EMEA
countries to grow.
 The business needs sufficient funds for the management of capital assets and working
capital throughout the growth period. It is also advised that funds will be adequately
structured by either bank loans or new securities. The company's profitability status
would promote the availability of credit.
 To provide the customers with clean and healthy food to guarantee the consistency of
their products, the hygiene management system will be enforced. The coloring of natural
materials will be carefully checked during the health phase of distillation, extraction,
flavoring and fermentation. In order to retain intact the nutritional content, natural food
and beverage color and taste must be preserved. External preferences will be avoided.
 The dairy product survival cycle needs to be optimized and an effective method to
improve the longevity of dairy goods should be enforced. Instead of utilizing artificial
preservatives, natural co servants. Packaging must be used, supply and culinary service
must be adapted to the consumer option and desires that may contribute to growth in
market amount. Product validity must be properly preserved.
 It is best to use the natural ingredients and form. Because of another product containing
the material, multifunctional natural material such as roux (food flour and fat thickener)
can be included.

CONCLUSION
Based on an overall evaluation of Kerry Group results from the interim management
survey, it can be assumed that, relative to the year 2015, Kerry Group outperformed in 2016. In
EMEA and Asia Pacific nations, Kerry Group was also expected to expand its presence more
rapidly. There will be many challenges when growing the sector, as funds and creative campaign
strategies would need to be carefully organized to reach the demand. Kerry Group's corporate
strategy aims to devise and execute essential goals and to take appropriate steps to accomplish
them. The corporation is therefore supported to grow its market in and outside of its homeland
by strictly following the laws, through the oversight of the government, and by pursuing market
growth in the future. The Kerry Group Interim Management Report represents the existing
productivity development and opportunities for potential progress. The company's financial
management allows recognizing and covering financial necessities efficiently anytime it wants,
which ensures the firm has no shortage of resources that could place hurdles on its operation.
The business has adequately handled its loans and funding and its contractual commitments have
been fully and quickly written off. There, it is appropriate to state that the Kerry Group is
capable of experiencing potential financial success by growing its foreign sector. The Brexit
problem must be dealt with quickly in order not to impact export growth in the UK. For order to
produce better performance, the guidelines will be fully adopted and applied.

REFERENCES
Books and journal:
Kölbel, J.F., Busch, T. and Jancso, L.M., 2017. How media coverage of corporate social
irresponsibility increases financial risk. Strategic Management Journal, 38(11), pp.2266-
2284.
Karna, A., Richter, A. and Riesenkampff, E., 2016. Revisiting the role of the environment in the
capabilities–financial performance relationship: A meta‐analysis. Strategic Management
Journal, 37(6), pp.1154-1173.
Atmadja, A.T. and Saputra, K.A.K., 2018. Determinant factors influencing the accountability of
village financial management. Academy of Strategic Management Journal.
Kwon, I.W.G., Kim, S.H. and Martin, D.G., 2016. Healthcare supply chain management;
strategic areas for quality and financial improvement. Technological Forecasting and
Social Change, 113, pp.422-428.
Honggowati, S., Rahmawati, R., Aryani, Y.A. and Probohudono, A.N., 2017. Corporate
governance and strategic management accounting disclosure. Indonesian Journal of
Sustainability Accounting and Management, 1(1), pp.23-30.
Chung, H.F. and Kuo, T., 2018. When and how managerial ties matter in international
competitive strategy, export financial and strategic performance framework. European
Journal of Marketing.
Böhm, E., Eggert, A. and Thiesbrummel, C., 2017. Service transition: A viable option for
manufacturing companies with deteriorating financial performance?. Industrial
Marketing Management, 60, pp.101-111.
Online:
About interim report of Kerry plc, 2016 [online] available through:<
https://www.kerrygroup.com/investors/results-presentations/2016-H1-Results-
Presentation-4-8-16.pdf>
The impact of Brexit on Kerry Group. 2017 [online] Available through:<
https://rctom.hbs.org/submission/the-impact-of-brexit-on-kerry-group/>