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Kerry Group considering options for UK and Ireland dairy business

·2-min read

DUBLIN (Reuters) - Irish food and ingredients company Kerry is undertaking a strategic review of its dairy business in Britain and Ireland, which may lead to a transaction in the coming months, Chief Executive Edmond Scanlon said on Tuesday.

Scanlon was speaking after Kerry published 2020 results, which saw COVID-19 related disruption help push revenue down 4% to 6.95 billion euros ($8.44 billion) and trading profit down 11.7% to 797.2 million euros.

The review would consider dairy production and consumer food assets with an annual revenue of around 900 million euros, Scanlon said in an interview.

"We're taking a stand back and doing a strategic review. Evaluating several options. One of those options could lead to a transaction but may not lead to a transaction," Scanlon said, adding the process may not conclude until the second half of the year.

He declined to comment on the number of possible parties that might be interested in the assets or on their likely valuation.

Goodbody Stockbrokers recently estimated the assets might be worth around 800 million euros, pointing to Kerry co-op, whose shareholders include farmers that sell milk to Kerry, as the most likely purchaser of a stake in the new business.

Kerry's core taste and nutrition business, which focuses on food ingredients, accounts for around 90% of groups profits and 80% of sales, with the remainder coming from consumer foods.

But Scanlon denied the company was looking to get out of consumer foods altogether, pointing to growth in plant-based meat alternatives and growth of consumer food sales volumes of 8.8% in the last quarter of the year.

Kerry reported sales volumes down 2.9% in 2020, but a return to growth of 2.2% in the final quarter.

It declined to give a profit forecast for 2021, but said it was expecting flat to positive volume growth in the taste and nutrition business in the first quarter.

"There's momentum coming into the year, but there continues to be uncertainty," Scanlon said.

Kerry shares were up 0.5% at 0822 GMT.

($1 = 0.8236 euros)

(Reporting by Conor Humphries; Editing by Alex Richardson and Mark Potter)