1. Company Perspectives:
Kerry is committed to being a leader in its markets through high technological
creativity, excellent quality and superior customer service. The Group focuses on
continuing to expand its presence in worldwide markets for food ingredients and in
the development of consumer foods business in Europe.
Company History:
Kerry Group plc is a leading supplier of food ingredients worldwide. Headquartered
in Ireland, Kerry Group has expanded its operations worldwide, with a strong
presence in Europe and in the United States with a growing presence in the region of
the Pacific Rim. Kerry has production facilities in 14 countries with sales of its more
than 7,000 products that reach more than 70 countries. Kerry continues to expand
rapidly, mainly through a strong program of acquisitions.
Kerry operations are spread across three primary market objectives. The first and
most important of the annual turnover of the company lies in the Food Ingredients
Division, which represents more than half of the turnover of Kerry and almost three-
quarters of the annual operating profit. The supply of food processors, especially
multinational companies, and others, Kerry Ingredients produces over 6,000 products
for individual categories, including spices and coatings;dehydrated; Dairy products;
Fruit preparations; Bakery, a share of market leadershipof the U.S market mix ; and
special ingredients.
Ingredients of the company include flavours, functional ingredients - for the
processing of yogurt and ice cream and many consistency and flavour enhancer and
additives found in processed foods. A primary market for this area is the spices and
coatings market segment, including systems crumb dough and meat, poultry, fish and
convenience products.
Through subsidiaries Lucas Ingredients, Produits Jaeger , PAC, Morton Foods, and
ABC , Kerry has earning the European leadership for these products. Kerry
Ingredients Division also produces floor and baked goods mixes for private label
market and their own company Homepride and Green labels.
Other brands include ingredients Kerry PSF and Ravifruit Aptunion , have captured
the leading position in the market for fruit processing; and Trumato business line
improved tomato powder products, the company is developing " greenseed " with a
production facility based in Irapuato , Mexico.
In the United States, Kerry’s DCA and other subsidiaries have enabled the company
to take the leadership share of the processed cheese and dairy products. Kerry has also
focused on market growth for South America, with a production facility in Brazil to
serve the country and Argentinean and Chilean Food market. Kerry also makes moves
to its presence in Asia to expand in the Pacific region. In addition to a manufacturing
facility in Sydney, Australia, Kerry has a second production plant in Johor Bahru ,
Malaysia bought to serve the rapidly growing population in the region.
This corresponds to about one-third of the annual income of Kerry Group , Kerry
Foods division is a leading chilled food manufacturer working at the Richmond
society Wall, Denny, Bally Free and brands Mattessons UK, as well as other private

2. label and third party brands . Kerry Foods specializes in five product categories, with
an emphasis on pork and other meat products, meat, poultry, dairy and convenience
products. Kerry Foods focuses mainly on the markets in Ireland and the UK, where
the company built up an extensive sales and distribution network, while continuing a
steady expansion in the European Community markets. All manufacturing facilities of
the Division are in the UK and Ireland, including Shillelagh , Ireland plant pork
processing companies, given in 1994 in order that remains one of the most
technologically advanced processing equipment European cuisine.
In addition to meat products, which accounted for about 80 percent of production
Kerry Foods, also produces this division and sells dairy products, yellow grease,
including “Moveover Butter" from popular brands and companies Kerrymaid fruit
juices and mineral water.
The last of the three divisions are Kerry Agribusiness, which is the base foundation of
the company. Kerry Agribusiness is responsible for the coordination of the 4000 -
strong contingent of raw milk and dairy suppliers. Kerry Agribusiness provides
service for the dairy farm suppliers to help them maintain the nutritional quality of
milk products and maximize production efficiency and cost. Kerry Agribusiness
provides technical services, including breeding technology, services and research, and
a fleet of delivery vehicles milk and food products complement to traditional grazing
methods.
These three divisions allow Kerry, a vertically integrated production, processing and
distribution system that has grown a leading role in the UK and European market. The
chief executive of the company's growth has been Denis Brosnan, general manager,
who has served the company since its listing in the mid-1980s.
Kerry’s debt position
Leverage ratio indicates the relative proportion of shareholders' equity and debt used to
finance the company's assets. A low debt to equity ratio indicates lower risk, because debt
holders have fewer claims on the company's assets. A debt to equity ratio of 5 means that
debt holders have a 5 times more claim on assets than equity holders.
A high debt to equity ratio usually means that a company has been aggressive in financing
growth with debt and often results in volatile earnings.
The financial ratios calculated fall into three categories: liquidity, profitability, and
efficiency . For the liquidity ratios, the current ratio, quick ratio, and net working
capital ratios were used to analyze each company’s ability to pay off its short-term
debt obligations using the assets that are most readily converted into cash. Return on
assets, return on equity, and earning per share ratios were used to calculate the ability
of the companies to generate earnings as compared to expenses and other costs or

3. profitability ratios. Lastly, asset turnover, leverage, and interest coverage ratios were
used to calculate the performance ratios which measure the company’s overall
financial performance level on a variety of levels.
The time series analysis of Kerry Group’s liquidity ratios for the years 2012 and 2013
shows a general decline in their liquid position. For Kerry Group, the liquidity of the
company is okay, in that they are capable of paying off their short-term obligations
however indications suggest that they have a lower margin of safety. The lower
margin of safety is a result of two ratios, the quick ratio and the net working capital
ratio. According to industry averages, the quick ratio should be about 1.52 which is
calculated by taking current assets minus inventory then dividing by current liabilities
all of Kerry Group’s time series numbers are less.
Net working capital is calculated by subtracting current liabilities from current assets
then dividing by total assets.
The time series analysis for Kerry Group shows an overall increase in profitability
from 2012 through 2013. In 2013, there was a decline due to a decrease in Net
Income from the previous year. Kerry Group’s profitability tends to be lower than
industrial averages in the areas of return of assets (ROA) and earnings per share (EPS)
but is above industry averages for return of equity (ROE). Return on assets is
calculated by dividing net income by average total assets. The industrial average for
return on assets is 8.44% , Kerry Group’s trend showed two years of increasing ROA,
. A significant increase of 1.01% that occurred between 2012and 2013, was the result
of acquisition integration and restructuring cost. These losses were the result of
closures of factories, relocation of resources, and the streamlining of operation in
order to integrate businesses into Kerry’s existing operating model. In addition, Kerry
Group completed a number of acquisitions during 2012 and 2013, resulting in a
notable increase in acquisition and restructuring costs associated with these
investments. This was specifically the acquisition of Cargill’s Flavours Business, and
disposal of property, plant, and equipment, and other disposals of businesses.
Kerry Group is an overall pretty good performer financially; most ratios have
performed closely with industry averages. The leverage ratio is the only ratio that is
below the consumer food industry average which is 1.96 (Financial Intelligence
Company, 2013) which means it is performing at a level greater than the industry as a
whole. In 2013 Kerry Group’s leverage ratio increased, while in 2012 it decreased,

4. the increase was due to increased debt specifically in borrowings in 2013. Asset
turnover ratios for Kerry Group between the years 2012 and 2013, remained steady,
and are all above 1 indicating Kerry Group is efficient at generating sales utilizing its
assets. Intangible assets increased during the year, due to goodwill and brand related
intangibles that were acquired, as well as additions to computer software, and
exchange related translation adjustments to the carrying values of these intangibles.
Interest coverage increased steadily from 2008 to 2011, before declining in 2012.
This decline stems from the increase in acquisition related expenses incurred during
the year, as the interest cost changed only slightly. Interest Coverage is the only ratio
that has been lower than industry average which is 8.65 (Reuters, 2013), which is
likely due to having a lower operating profit.