Kerry Group is likely to focus more on its branded chilled portfolio, which includes brands such as Cheestrings and Matteson's, should the disposal of its frozen foods business take place, according to Liam Igoe of Goodbody Stockbrokers.
Press speculation at the weekend suggested that Kerry is ready to offload its frozen foods division, with Greencore the most likely suitor, according to the Irish Independent. The paper said that Kerry is believed to have appointed advisors to help find a buyer for the business.
Kerry's frozen division is a "low margin business which mainly produces frozen ready meals for the UK market," said Igoe. "While no disposal prices are mentioned, we reckon the proceeds would be modest at circa €20-30 million.
"Kerry Group is reaching the conclusion of a rationalisation process in Kerry Foods, where we expect it to focus on its higher margin branded chilled businesses."
In its Q3 interim management statement, released earlier this month, Kerry said that the "frozen meals category remained challenging" for the company, however it added that it "continues to outperform market conditions due to successful brand, channel and new business development."
In the nine months to 9 September, Kerry saw a 1.2% decline in its Consumer Foods business, with its Ingredients & Flavours business growing by 3.6%.
When contacted by Checkout, Greencore said that it does not respond to market speculation.
© 2014 - Checkout Magazine by Stephen Wynne-Jones