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 €1.7bn
• Full year constant currency earnings guidance unchanged¹

Edmond Scanlon, Chief Executive Officer, says: “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."

¹Includes 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® 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.