Kerry Group, the parent company of Kerry Dairy Ireland, confirmed in its third-quarter update last week that it would be launching a third €300m share buyback programme once the current one is completed.

The current programme will reach its purchase target of €300m of shares in the coming weeks. Between January and May of this year the first of the three buyback programmes purchased €198m of Kerry shares, putting the 2024 total before the launch of the third programme at €498m.

It is reasonable to expect that the third purchase programme would add at least another €100m to Kerry’s share buyback spending for this year, implying the likely total Kerry will spend in 2024 buying back its own shares will be around €598m.

Speaking to the Irish Farmers Journal in June, CEO of Kerry Dairy Ireland Pat Murphy put the size of Kerry’s milk pool at 1.15bn litres.

Allowing for the nationwide 5% reduction in milk supply this year, it would seem reasonable to put the milk delivered to Kerry in 2024 at 1.1bn litres.

Using the June average milk price paid of 45.57c/l (inc VAT) – as reported by Kerry – then the total amount paid for milk during the year would be just over €500m, significantly short of what will have been spent during the year buying shares in Kerry Plc.

The buyback, where Kerry’s agents (either J&E Davy in Dublin or Goldman Sachs in London) buy shares in the company from the stock market for Kerry, with Kerry then wiping out those purchased shares, has come as the share price in Kerry Plc has increased.

While it is unclear how much of that increase has been due to the programme, investors in the company have done well with each share currently worth in excess of 30% more than a year ago (see Figure 1).