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A record performance by Kerrygold has helped Irish dairy group Ornua increase revenues 9% in 2016 to €1.8bn.
Group EBITDA surged 18% in the period to €43.1m and operating profits rose 46% to €26.6m.
Ornua hailed the “strong” trading performance in a year of volatile milk prices and political uncertainty in a number of its key markets.
Butter brand Kerrygold racked up record global retail sales of €900m, with the US reporting 20% volume growth. The business also launched Kerrygold Yogurts in Germany during the year, with more than 10 million pots sold in first six months
CEO Kevin Lane said: “We are very pleased to report a strong 2016 performance. Excellent performances in established markets such as Germany and the US were accompanied by continued expansion in our developing markets of Africa, China and the Middle East.
“These results were achieved against a backdrop of significant market volatility and political uncertainty. We have built a diverse global business by investing in our brands, technology, in-market presence and our people.
“Ornua now exports to over 110 countries around the world. This strategy is ensuring our ability to continue to deliver for our members and for the Irish dairy industry, even in more uncertain market conditions.”
The group closed the year with net cash of €57.2m compared with net debt of €17.3m in 2015 and a “very strong” balance sheet with net assets in excess of €500m. Ornua added this gave it “significant flexibility” to fund future growth and support the working capital requirements of its members.
Morning update
Catering giant Compass Group (CPG) has increased organic underlying revenues by 3.6% to £11.6bn in the first half as growth accelerated in the second quarter.
The group reported a strong six months in the US, with organic revenue growth up 7.1%, with improving trends in Europe, where it recorded a 1.6% rise. However, it registered a 5.1% decline in the rest of the world.
Total revenues jumped 20% in the six months to 31 March, from £9.5bn to £11.5bn thanks to favourable currency translation.
Operating profit grew by 25% to £877m, with 18% a result of exchange rates, with underlying operating profit up by 5.2% on a constant currency basis to £894m.
Compass increased its proposed interim dividend by 5.7% and also announced a proposed £1bn special dividend.
CEO Richard Cousins said: “Compass had a good six months, with the business performing as expected. North America continues to deliver excellent growth and trends in Europe are improving. In rest of world, reasonable growth in business & industry, healthcare and education was offset by ongoing weakness in Brazil and our offshore & remote sector.
“We continue to drive operating efficiencies around the business which, combined with the end of the restructuring in our offshore and remote business, resulted in margin improvement of 20bps in the period.
“Given our excellent cash generation and the strength of the business, we are announcing a £1 billion special dividend. This reflects our commitment to return surplus cash to shareholders whilst maintaining an efficient balance sheet.
“Our expectations for FY 2017 are positive and unchanged, with growth weighted to the second half. Our pipeline of new contracts is encouraging and our focus on organic growth, efficiencies and cash gives us confidence in achieving another year of delivery.
“In the longer term, we remain excited about the significant structural growth opportunities globally and the potential for further revenue growth, margin improvement, as well as continued returns to shareholders.”
Compass shares are up 0.2% so far to 1,598p.
The CMA has decided to launch an in-depth phase 2 investigation into Just Eat’s (JE) proposed £200m acquisition of rival takeaway app Hungryhouse – unless the company can address competition concerns. Following its initial investigation into the merger, the regulator decided the companies are close competitors because of the similarity of their service and broad geographical coverage. The CMA said that more recent entrants to this market offering delivery services – such as Deliveroo, UberEATS and Amazon Restaurants – represented less direct competition to the companies as these tended to target different types of restaurant.
“The CMA is therefore concerned that the loss of competition resulting from the Just Eat/Hungryhouse merger may result in worse terms for restaurants using either of the two companies,” a statement added.
Just Eat has until 17 May to offer proposals to resolve the competition concerns before the case is referred to the in-depth investigation stage.
“Just Eat looks forward to cooperating with the CMA and is committed to demonstrating to the CMA that the market is, and will remain, competitive following completion of the proposed transaction,” the business said this morning. “In the meantime, Just Eat will continue to operate its business as usual.”
Shares in the group fell 1.1% to 558p as markets opened this morning.
Ahold Delhaize has reported higher margins as the combination of the two European retailer delivered strong synergies and resilient sales. In the first quarter, the newly merged retail giant reported a 65.1% increase in net sales to €15.9bn, with net income up 72.8% to €356m. Stripping out the benefits from the merger, pro forma first quarter net sales increased by 2.9% to €15.8bn and pro forma underlying operating income increased by €45m to €604m, up 8.1%.
Ahold Delhaize CEO Dick Boer said: “We are pleased to report a resilient first quarter performance with an increase in margins for the group despite the ongoing deflationary environment in the United States.
“We continue to make significant progress on the implementation of our Better Together strategy, investing in our customer proposition, while improving margins.
“Ten months after the merger of Ahold and Delhaize, we are fully on track with the integration and we are delivering on our synergy targets. We are driving forward our integration programs and continue to focus on sharing best practices across and within regions, as we aim to further strengthen our great local brands to ensure they remain customer-focused, close to their communities and positioned to win in their markets.
“For the full year, we reiterate our target of realizing €220m net synergies, including €56m realized year to date and expect that the full year 2017 underlying operating margin for the group will increase compared to 2016.”
Grocery tech group Eagle Eye has appointed David Aylmer as chief operating officer with immediate effect. Aylmer, who will report directly to CEO Tim Mason, has formerly held executive positions in the technology and financial services sector for more than 20 years. He joins from DPR Consulting, a retail finance technology company, where he was a senior manager responsible for client delivery, and prior to this he was IT director at Acenden.
Yesterday in the City
It was a mixed day for high street stocks after the BRC – KPMG Retail Sales Monitor for April revealed food sales increased 2.4% on a like-for-like basis and overall retail sales increased by 5.6%.
WH Smith (SMWH) climbed 1.9% to 1,791p, along with 1.2%, 0.6% and 0.1% rises for Tesco (TSCO), Morrisons (MRW) and Sainsbury’s to 181.7p, 240.8p and 269.7p respectively. There was also a 0.4% jump to 340p for B&M European Value Retail (BME).
Marks & Spencer (MKS) slipped another 0.2% to 379.9p, while Next (NXT) kept its head above water, up 0.4% to 4,329p. McColl’s Retail Group (MCLS) was down 0.9% to 201p and Greggs (GRGS) and ended the day flat at 1,080p after clawing back losses.
Off the high street online grocer Ocado (OCDO) surged 1.4% to 264.2p.
The FTSE 100 increased its small gains from Monday by adding another 41.35 points (0.6%) to 7,342.21.
Elsewhere, Dairy Crest (DCG), Hilton Food Group (HFG) and SSP Group (SSPG) leapt 2.4% to 608.5p, 3.1% to 767p and 1.6% to 461.9p.
Compass Group (CPG) climbed 0.4% to 1,586.3p ahead of this morning’s half-year results and Coca-Cola HBC (CCH) rose 1.6% to 2,198p ahead of a quarterly update on Thursday.
Premier Foods (PFD) made gains after ending flat on Monday on the back of its Cadbury licence renewal. The supplier was up 2.3% to 44p yesterday.
Fallers included Science in Sport (SIS), down 3% to 81p, and Glanbia (GLB), down 2.3% to €18.56.
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