Kerry Group – New strategic goals announced “HOLD”

Kerry Group announced their strategic targets for 2018-2022 this morning.

The Group aims to achieve 4-6% volume growth per annum in their Taste & Nutrition division coupled with 40 bps margin expansion per annum.

Consumer Foods is projected to grow volumes at 3-5% per annum while growing margins by 20 bps per annum.

Overall, the Group aims to achieve volume growth of 3-5% per annum and expand margins by 30 bps per annum.

Additionally, the Group aims to grow adjusted EPS by 10% per annum, achieve 12%+ ROACE, relatively outperform peers and have an 80% cash conversion ratio.

Kerry trades on 22.3x next year’s earnings, 16.1x EBITDA, with a 0.8% dividend yield. We continue to be impressed with management’s ability to produce stable returns for shareholders but we feel the stock is trading at fair value. We reiterate our recommendation “HOLD”.

Dylan Simmonds
Equity Analyst

Darren McKinley, CFA
Senior Equity Analyst