Kerry Forecasts ‘Grave’ No Deal Brexit Fallout For Irish Food Firms
Ireland's Kerry Group warned on Tuesday of 'grave consequences' for Irish food producers if Britain leaves the European Union without a replacement trade deal.
Kerry, which earned just under a quarter of its 2018 revenue of €6.6 billion ($7.5 billion) from Britain, said it moved to reduce its exposure to sterling and had stockpiled several weeks supply of raw materials in case of a 'no-deal' Brexit.
"If there was to be a crash-out of the European Union, one could expect a significant fall-off in the demand, at least in the short-term in the UK market" Kerry's chief executive Edmond Scanlon told journalists in Dublin.
While 80 percent of Kerry's revenues come from selling ingredients to other consumer food producers around the world, Britain is the largest foreign market for its own €1.3 billion consumer foods business.
Although the market had been quite robust, demand began to 'tail-off' in the last three months of 2018, Scanlon said.
"I think the threat of a no-deal Brexit... is going to have grave consequences to the broader market here in Ireland," he said, adding that Kerry would be protected by the significant time and resources it has put into preparations.
Scanlon said that while Kerry had several weeks of stocks built up in case of a disruption, some of its customers "are building out 2 or 3 months stock".
If Britain moves to World Trade Organisation (WTO) tariffs in the absence of a deal the impact would be 'extreme', but Kerry would pass on price increases to its customers, he said.
Kerry, which reported earnings per share growth of 8.6 percent for 2018, said earnings would grow by between 6 and 10% in 2019, with British consumer demand a key factor.