FINANCE AND STRATEGIC MANAGEMENT

ASSIGNMENT 2

OVERALL FINANCIAL STRATEGIC INTERIM REPORT FOR KERY GROUP

ROWLAND MOYO

R1901D7432377

UU-MBA-710-MW

24th MAY, 2020

Introduction

Presently the Kerry Group is the prominent company or in other words the leading establishment
in the overall nutrition as well as food industry. The Kerry Grouped first embarked on its
business venture beforehand in the south west of Ireland and this occurred in the early 70s,
mainly involving supplying several countries with distribution channels worth more than a
hundred million. The enterprise has taken pleasure in substantial growth as well as also faced as
well as sustainable lucrative growth with twelve-monthly revenue for a sum of about 2, Million
euros that was in the year of 2016 as well as a yearly sale of 6.38 Billion euros.

In addition, the Kerry group has grown at a steady rate in order to become the world’s front
runner in the food business with triviality or in other words significant existence in the total of
twenty Seven Countries of the world as well as in about 5 continents. The Kerry group mainly
functions in diverse markets which conclude or in other terms sum up the total the overall sales
figures of the businesses. EMEA made a contribution of about 45% sales, the Asia Pacific
Market made a contribution of about 13% that is of the total sales, whilst the American market
account for 43%.

An examination of Kerry group’s financial as well as strategic presentation including:

investigation of its strategy, market, complete business implementation, financial status as well
as position, business forecast, shareholder’s dividend as well as the company’s focal activities
will be illustrated in this report for the year of June 2016.

The Kerry Group Firm

The Kerry group of businesses mainly aims or targets at serving the interest of majority in the
community with various ranges of products or merchandises in their product line as recognized
by the company’s management. The product as well as the services offered by the Kerry Group
comprises of other pharmaceutical products, beverages as well as snacks. This variety of
products grants a very dinstivtive chance for customers that mainly patronize or demean the
business’s product being posed or accessible as for sale to its customers. Nonetheless, this
prospect or in other terms opportunity also brings about its own set of challenges. Being in
possession of an efficient as well as intelligent research development team, the Kerry has been
able to meet these obstacles as well as exceeding the anticipations of the stakeholders along with
the customers in the process. The group has been adept to sustain as well as maintain the quality
of the product as well as refining on the prevailing products along with the growth of new as well
as improved product built on the conducted in order to meet the customers requirements. The
research and development team for Kerry Group embarks on regular market research so as to
have a broad perspective on the needs of customers for instance, what customers would want in
their diets as well as incorporating this change in the product for the end user’s consumption.
With this single research it has resulted to the outcomes that has led to the establishment of
nutritional supplements as well as diets aimed at meeting the required health needs of a particular
class of consumers experiencing some health challenges. Several of other products were also
established or developed in order to encounter the nutritional requirements of the young as well
as the old respectively. The Kerry brand is quite famous for bringing to the table top quality as
well as top chilled food sector, top notch equipment is placed in the manufacturing of all range
of commodities.

Kerry Group Corporate Governance

The Firm of Kerry Group basically consists of a twelve member board of directors which
basically are; one executive director, Company CEO, eight independent directors, a CFO as well
as one chairman who is non executive, tasked with certifying the long term accomplishment of
the business. The board makes use of their vital unified expertise in order to form effective
means of administrating or managing the company with optimism in its day to day endeavours in
order to accomplish the general vision of the company.

Kerry Group Market Analysis

A Business’s market division has a meaningful influence in its general accomplishments. The
Kerry Group’s Market infiltration ratio in the industrialized countries to emerging ones stands a
ratio of 26% to a proportion of 74% (emerging: industrialized = 26:74). Even though the
company’s advanced market section has undergone or in other words suffered several
unparalleled setbacks for instance fluctuations in the price levels. Slow development in the
unemployment rates, rate of growth minimal, overall regional inflation, disapproving GDPs as
well as continuous changes in the fiscal regulations, the emerging market remains its top
estimated source of success as well as accomplishment due to the souring customer costs as
illustrated by the increase in the requirement for beverages as well as food. The business shows a
3.6% evolution in the revenue generated in this emerging world market. In order to control or
restrain the above stated trials, systems were introduced by the company in order to safeguard its
sustainability not only that but also escalating the demand of beverages as well as food by
researching and developing favourable change of foreign currencies at reasonable prices, thus
generating or establishing a competitive edge or advantage in the process.

Analysis of The Kerry Group Overall Strategy

In order to review the strategies of the Kerry Group company the SWOT framework was brought
in to play, in other words utilized as an analysis tool. The four strategies that were utilized are:
Strength to opportunities, weakness to opportunities, strength to threats as well as weakness to
strengths to threats.

Analysis utilizing Weaknesses to Opportunities Strategy

There is a need to revise the company’s financial management strategies as well as

improving them in order to ensure the sustainability as well as the overall company’s
position.
There is much more need for room improvement in terms of unemployment rate
reduction in order to intensify the competitive edge over the other competing rivalry
companies.
It is of paramount importance to build up or in other words to improve the management
of the company of its inventory as it presently illustrates poor positioning in contrast to
the competitors.

Analysis Utilizing Weakness to Threats Strategy

The inconsistent rates of demand for the business’s products due to unparalleled
alterations in estimated customer tastes negatively hinder its profitability. The company’s
whole business performance is also affected negatively by its decline in demand to
contending cheaper as well products of low quality from competing firms
The overall business performance of the company is affected negatively by having to pay
off some upsurge in liabilities which is due to continuous alterations in rules as well as
regulations concerning obligations or millstones in different countries
 The increasing costs allied with raw materials utilized in production affect the company’s
profit negatively
The overall business of the company is also affected negatively by having to pay off
lawsuits this is due to dynamic alterations in rules as well as regulations in diverse
countries which are not capable of following all of them in a well-timed manner.
Variations in the currency exchange rates affects the company’s profits in a negative
manner as the company has its operations in numerous countries.

Analysis utilizing Strengths to Opportunities strategy

The company’s consumer relationship is strong as illustrated in other terms pointed out
by constructive feedback thus allowing the business to be advantageous or profitable by
not utilizing vast funds for consumer retention.
The human capital of the company is highly skilled which in return allows the company
to produce better results effectively for this reason amending or improving overall
reversal time as well as profitability.
The company crowded or heaving invests as well as carrying out research along with
innovation which in the end leads to latest as well as enhanced products production as a
result positioning itself in a better or efficient competitive advantage to rivalries.
The company illustrates appropriate spending of its wealth in addition to favorable return
on investment which additionally improves its profitability as well as the aptitude to
venture into up to date developing markets.
The flow of cash in the Kerry Groups is optimally therefore allowing the company to take
on new undertakings which will make the most of its profits

Analysis Utilizing Strengths to Threats Tactics/Strategies

The Kerry Group has utilized the chance in other words taken advantage of digital
transformation basically by integrating e-commerce therefore having an amplified
distribution of consumer products.
Due to the steady position of inflation alterations, the company can amplify its success or
profitability deprived of escalating liabilities.
The company accomplishes its purchaser’s retention tactic quite effectively as well as
efficiently this is done by fine-tuning the prices appropriately on the other hand maintain
 the quality of the product at its best on top of government inducements being taken
advantage of.

Interim Management Report

The magnitude as well as space of altering consumer demands proceed to drive major business
along the supply chain as well as within the business. Various key global consumer trend for
instance genuineness, sustainability, healthfulness, clean label as well as suitability align with
accessible local purchaser favorite proceed to drive enlarged innovation opportunities. The Kerry
Group business organization as well as its commodities design relevant favoring consumers to
augment or improve speed to market in order to meet up with the customers expectations basing
on preferences as well as choice.

The Kerry Group brought about volume development in other terms growth ahead of its markets.
Nutrition as well as taste also acquired continuous volume development in North America,
furthermore there is also development in Latin America, Europe perceived wonderful
performance as well as further continuing strong growth in APMEA. In this period United
Kingdom as well as Irish consumer foods market stumbled upon challenges, nevertheless the
Kerry Groups Consumer Foods section pulled through by bringing about remarkable business
performance.

Kerry Group’s Business Routine Analysis

i. Nutritive as well as Taste Products

Kerry Group’s EMEA Area Analysis

Political Instability can be seen as one of the major threats to Kerry Group’s business
performance in the emerging markets, which does not make it any easier to successfully estimate
the along with retaining the current customers therefore affecting profitability negatively.
Additionally, in the emerging markets there is an ever escalation of reduction of product prices
which extends in diminishing the profit margin of the company. Africa, Middle East, Europe are
mostly the affected areas since that’s where the Kerry Group operates. In spite of these obstacles
the Kerry Group addresses or attends to these strategically by donating combined along with
ground breaking products which are modified to the regional environment therefore amplifying
or preserving product demand by consumers in detailed regions. The Kerry Group’s food
division endlessly goes all out to craft market growth through investigating or research as well as
other ground breaking ideas to prompt customer actions as well as maximizing revenue. From
the time period ending June 2016 according to the evaluation of the Kerry Group financial data,
it illustrates that the company made some beneficial revenue from the general sales which
amounted to seven hundred and fifty four million euros, an escalation of 0.4% from the past
incomes in addition to affordably lower price at 3.8 %. The company’s involvement in being of
the digital transformation of its business activities develops turn around time, market volume in
addition to general efficiency therefore escalating its wealth much further as well as quicker. It
was noted that between the meat segment as well as the snack section, it showed that there was
low performance in the meat segment, on the other hand in the snack section it showed that it
was the most sought in demand, leading to the general successful performance of the business in
that particular region, i.e. Russia. Even though there is an increase in terms of competition in the
Sub-Saharan Africa from adversaries, the high requirement for beverages resumes to rise as a
result this allows more room for profitability as well as expansion.

The Asia Pacific Regions

In japan as well as South Korea, the business portrayed important growth with the noodle
products it produced, in addition to the company’s attainment of the Junglin food corporation,
this led to the Kerry group in having a powerful foothold in the vicinity, South Korea with the
attainment of the taste technology firm, as a result meaningfully escalating dairy products
requirement in china and Indonesia, Philippines and Vietnam areas. Furthermore, in the
Philippines, the Kerry Groups vast Snacks division likewise ascended its revenue across to
Thailand as well as Malaysia. The evaluation illustrates a 9.6% buildup general evolution in sales
as well as revenue, a 1.9 reduction in cost as the regional complete income was three hundred
and sixty seven million euros, a minor reduction of 12.5% subsequent from sale of business
subsidiaries.

The American District

The Kerry Group of the North along with Latin Americans venture tactic fully attuned to a
healthy lucrative stand due to its commitment up of advanced technological investigation and
modernization allowing the business to commence first-hand, efficient as well as products of the
highest quality in 2016 therefore acquiring a tactical position to fend off rivals. The company has
also attained various firms for instance red arrow products, with an escalation in meat
requirement in North America and for snack in the central America.

In North America, the Kerry Group meet proceeds to feel formidable growth, meeting customer
requirements for true taste, natural presrvations as well as broader range alternate protein based
products.

Kerry groups Snacks also accomplished strong development via fresh inventive better snacks and
world taste feel.

ii. Food Products

The Kerry Groups financial plus tactical assortment is positioned well taking into account
numerous market circumstances: the company much improvec competitive edge in Ireland and
Britain area due having retailers which are adptable plus easily altered to any market variations
=. In United Kingdom market, the meat segment portrayed a steady escalation, whereas snack
illustrated a 9% escalation in demand. This was due to innovative ideas such as the introduction
of canned meat and other efficient products manufactured in 2016.

Financial Performance

Basing from the exploration of the Kerry group’s financial statistics, the company’s income
escalated by 4% from the three million twenty thousand Euros in 2015 to three million thirty six
thousand Euros in 2016, cost reduction of 3.3%, a reduction of 0.3% in prices related raw
materials prices because of outcomes of currency conversions, which functioned in accord of the
business. The firms recently presented segments constituted a cost of 4.3%. the company
witnessed an escalation in income of 2,6% (two billion and four hundred million Euros 2016)
from the business’s taste as well as nutrition market section, from two billion three hundred
thousand Euros2015. The business noticed growth if 4.6% and cost decrease of by 3.3%.

Company’s Net Financial Cost

The company had a towering financial costs as it was sponsoring acquisitions of other
corporations in order to penetrate the market, from 2015 – 2016, there was a rise of 8.4% that is
from thirty six million to thirty nine million Euro.
Company’s Trading Profit and Margin

The business multiplied by 7.5% trading growth in as it produced over three hundred and twenty
million Euros 2016 in contrast with 2015, where the company came up with three hundred
million Euros. This was basically due to combining integrated goods, eradicating of some
product lines as well as acquiring more corporations in the area. The Kerry Group escalated by
71 points from 9.9% 2015 to 10.7% 2016.

Flow of Cash

The company statistics illustrates free flow of money amounting to three hundred and seventy-
nine million euros for the year finishing in June2016, displaying a slight escalation in inbound
cash flow due to a reduction in the business’s working capital as well as fixed assets from one
hundred and fifty-two million euros in 2015.

Kerry Groups Financial Position

Non Fixed Assets

The non-fixed assets at Kerry Group stand at E3.414 million which is a reduction of thirty five
million compared to 3.449 million euros in 2015, subsequent from shifting currencies which
instigated the business to make gains along with losses as well throughout currency exchanges

Fixed Assets

As for the year ending in 2016, the Kerry Group’s present assets illustrate an escalation from
1.843 million euros 2015 to 1.99 million in H1 2016.

Dividend

The Kerry Group’s shareholders dividend had escalation of about 13% HI 2015, whereas the
share rate was originally 16cents, now risen to 16.9% in 2016. This is quite fortunate for the
shareholders as it is in their greatest interest to amplify their capital.

Future Prospects

Even though the company has come across several obstacles, in general Kerry Group company
has a progressive business as well as financial stand into to be maintainable for a long period of
time as it has polies in place for retaining existing consumers, attaining more firms or companies
that have by this time established themselves in the precise market to magnify its market share in
addition to taking advantage of technology to cultivate fresh state of the art products which will
entice more market sections along with placing the company in a competitive lead in contrast to
rivalries.

To put it briefly, the Kerry Group formulated plans for the future ahead of its time to defeat any
ecovery issues surfacing from external as well as internal business setting so as to alleviate and
withstand competitive advantages from other businesses.
APPENDICES

i. Appendix 1: Cash flow of Kerry Group for interim period

H1 2015 H1 2016

Cash inflow from operations 347 491

Finance Costs paid (net) 23 26

Capital expenditure (120) (65)

Income taxes paid (14) (25)

Trading profit 302 324

Movement in average working capital 11 121

Depreciation (net) 62 69

Pension contributors given less pension expense (25) 21

Free cash flow 194 382

ii. Comprehensive income for year ended 30 June 2016

Resolution of adjusted earnings per share % Change H1 2015 H1 2016

Trading profit 8.5% 300.6 322.7

Trading margin 10.1% 11.7%

Revenue 1.4% 3,030.2 3,038.7

Finance costs (37.4) (40.2)

Attuned earnings before taxation 6.9% 257.3 273.2

Computer software remuneration (10.1) (12.5)

Income taxes (without non-trading items) (36.7) (37.3)

Non trading items (3.9) 29.3

Attuned earnings after tax 8.4% 221.1 234.6

Profit after taxation (7.3%) 239.9 233.6

References
1. Kerry group (2016). Press release on interim management report. Retrieved from:
https:www.kerrygroup.com/doc./news/featured/2016-interim-management-report.

2. Kerry Group Plc, (2013). Consumer packaged goods – company profile, SWOT &
financial report. Basingstoke: Progressive Digital Media. Retrieved from
https://search.proquest.com/docview.

3. The Kerry Group. (2011). The Kerry Group strengthens business development team.
Education Letter. Retrieved from:
https://search.proquest.com/docview/905795034?accountid=188730.

4. Kerry Group Plc. (2015). Kerry Group announces $735 million acquisitions. Dow
Jones Institutional News. Retrieved from:
https://search.proquest.com/docview/2061879506?accountid.