TIDMKYGA
RNS Number : 6138X
Kerry Group PLC
27 April 2023
Date: 27 April 2023
LEI: 635400TLVVBNXLFHWC59
KERRY GROUP
Q1 INTERIM MANAGEMENT STATEMENT 2023
Continued Growth through the First Quarter
OVERVIEW
* Group organic growth of 8.5% (volume +0.2% | pricing
+8.3%)
* Taste & Nutrition volume +1.2% | pricing +7.2%
* Dairy Ireland volume -5.8% | pricing +14.4%
* Group EBITDA margin -70bps
* Net Debt of EUR1.7bn
* Full year constant currency earnings guidance
unchanged(1)
Edmond Scanlon, Chief Executive Officer
"Our performance in the first quarter was driven by good volume growth
in APMEA and Europe, led by strong growth in the foodservice channel,
as customers in the North America retail channel worked through elevated
inventory levels across the period. Overall growth was led by the
Dairy, Snacks and Pharma markets, as customers continued to innovate
their offerings while navigating the heightened inflationary environment.
We continued to make good strategic progress through footprint expansion
and portfolio evolution with the sale of our Sweet Ingredients Portfolio,
further enhancing and developing our business in areas where we can
add most value.
While recognising the current market uncertainty, we believe we remain
strongly positioned for growth and we reiterate our full year constant
currency earnings guidance."
(1) Includes impact from the disposal of the Sweet Ingredients
Portfolio which completed on 27 March 2023 as previously
announced
Markets and Performance
Consumer demand remained resilient through the period given the
heightened inflationary environment. Customer innovation was
primarily focused on new taste profiles, enhancing their products'
nutritional characteristics and providing more value options for
consumers.
Group reported revenue increased by 10.3% in the period. This
comprised increased business volumes of 0.2%, increased pricing of
8.3%, favourable translation currency of 1.5% and contribution from
business acquisitions net of disposals of 0.3%. Group EBITDA margin
decreased by 70bps primarily driven by the mathematical impact of
passing through input cost inflation, partially offset by the
positive effect from cost efficiency initiatives.
At the end of the period, the Group completed the sale of the
trade and assets of its Sweet Ingredients Portfolio to IRCA.
Business Reviews
Taste & Nutrition
Growth driven by strong performance in foodservice channel
> Overall volume growth of 1.2% with good growth in APMEA and Europe
> Growth led by Dairy, Snacks and Pharma
> Pricing of 7.2% reflected the management of input cost inflation
> EBITDA margin reduction of 80bps with the effect of passing
through input costs partially offset by efficiencies
Taste & Nutrition delivered solid overall volume growth
through the period despite the effect of increased pricing.
Foodservice continued its momentum with strong volume growth,
supported by innovation with quick service restaurants and coffee
chains on new menu development, seasonal products and solutions to
enhance back-of-house efficiency. Overall performance in the retail
channel was muted in the period, reflecting customers' inventory
management in North America.
Growth in the period within the Food EUM was led by Dairy,
Snacks and Meat, supported by continued innovation and strong
performances in savoury taste and Tastesense(R) salt and sugar
reduction technologies. Business volumes in emerging markets
increased by 6.0% in the period, driven by strong growth in the
Middle East, Southeast Asia and LATAM.
The global Pharma EUM achieved good volume growth, led by a
strong performance in cell nutrition.
Americas Region
> Volume reduction of 1.6% with customer inventory management
significantly impacting the retail channel
> Foodservice performed well with continued strong business development
> Beverage, Dairy and Meat delivered a solid overall performance
> LATAM delivered strong growth
Performance in the region was impacted in the period by customer
inventory reductions particularly in the North America retail
channel. Foodservice performed well with continued growth and
business development in back-of-house efficiency solutions and
seasonal menu offerings.
Within North America, growth in Beverage was driven by
innovations incorporating Kerry's botanicals, coffee extracts and
Tastesense(R) sugar reduction technologies. Dairy also performed
well with Taste technologies across ice cream and dessert
categories, while performance in Meat was driven by culinary taste,
texture systems and clean smoke technologies.
Growth in LATAM was led by a strong performance in Mexico across
Beverage and Snacks, while growth in Brazil was driven by
performance in Meat and Beverage.
Europe Region
> Volume growth of 3.9%
> Growth led by Snacks, Dairy and Meals
> Strong growth in foodservice with retail delivering a solid performance
The region achieved another strong quarter of growth, while
managing significant price inflation. Snacks delivered strong
growth through savoury taste systems and Tastesense(TM) salt
reduction technologies. Growth in Dairy was supported by new
innovations in ice-cream and dairy applications in the foodservice
channel, while Meals achieved good growth through taste
technologies and functional solutions.
Growth was broad-based across the region with strong growth in
the foodservice channel, particularly in quick service restaurants
and coffee chains, while the retail channel delivered a solid
performance given the current inflationary environment.
APMEA Region
> Volume growth of 5.2% led by the Middle East and Southeast Asia
> Strong growth in Meat, Meals, Dairy and Bakery
> Retail performed well with food service delivering strong growth
Growth in the region was primarily driven by strong performances
in the Middle East and Southeast Asia, while China recovered
through the period as market conditions improved.
Overall growth was strong across the Food EUM, particularly in
the foodservice channel. Growth in Meat was driven by local
authentic taste and texture solutions, while Meals and Dairy
delivered strong growth through culinary and dairy taste systems.
Performance in Bakery was supported by new launch activity and
increased demand for functional systems with regional leaders.
During the period, good progress was made in expanding the
Group's capacity in the region, including the development of its
new taste facility in Karawang, Indonesia.
Dairy Ireland
Overall performance reflective of market conditions
> Volume reduction of 5.8% and increased pricing of 14.4%
> EBITDA margin reduction of 80bps resulting from input cost inflation
Overall volumes in the period in Dairy Ireland were lower and
pricing was higher given the heightened year-on-year inflationary
cost environment.
Dairy Ingredients volumes were impacted by high market prices
and expectations of inflation turning to deflation, given global
market supply and demand dynamics across the first quarter.
Dairy Consumer Products performed well in the period, with
overall growth led by Kerry's branded cheese ranges and
private-label spreads, supported by increased promotional
activity.
Financial Review
At the end of March, the Group's net debt of EUR1.7 billion
reflected cash generation and proceeds from the disposal of the
Sweet Ingredients Portfolio. The Group's consolidated balance sheet
remains strong, which will facilitate the continued organic and
acquisitive growth of Group businesses. Foreign exchange
translation is currently expected to be a headwind of approximately
3% on earnings in the full year based on prevailing rates.
As announced on 16 February, the Group has proposed a final
dividend of 73.4 cent per share for approval at the Annual General
Meeting.
Future Prospects
While market conditions are currently uncertain, Kerry remains
strongly positioned for growth with a good innovation pipeline. The
Group will continue to manage input cost fluctuations with its
well-established pricing model. Kerry will continue to invest
capital and develop its portfolio aligned to its strategic
priorities.
The Group expects to achieve adjusted earnings per share growth
in 2023 of 1% to 5% on a constant currency basis.
Disclaimer
This Announcement contains forward looking statements which
reflect management expectations based on currently available data.
However actual results may differ materially from those expressed
or implied by these forward looking statements. These forward
looking statements speak only as of the date they were made, and
the Company undertakes no obligation to publicly update any forward
looking statement, whether as a result of new information, future
events or otherwise.
CONTACT INFORMATION
=============================================
Investor Relations
Marguerite Larkin , Chief Financial
Officer
+353 66 7182292 | investorrelations@kerry.ie
William Lynch , Head of Investor
Relations
+353 66 7182292 | investorrelations@kerry.ie
Media
Catherine Keogh , Chief Corporate
Affairs & Brand Officer
+353 45 930188 | corpaffairs@kerry.com
Website
www.kerry.com
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END
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