Kerry Group, a leading Irish food company, has reported organic growth of 8.5% for the first quarter of 2023. The growth was driven by good volume growth in Asia Pacific, Middle East, and Africa (APMEA) and Europe, led by strong growth in the foodservice channel. The overall volume growth for the Taste & Nutrition element of the business grew, while the company said pricing reflected the management of input cost inflation. The report stated that the growth was led by the dairy, snacks, and pharma markets, as customers continued to innovate their offerings while navigating the heightened inflationary environment.
Edmond Scanlon, CEO at Kerry, said, “While recognising the current market uncertainty, we believe we remain strongly positioned for growth and we reiterate our full year constant currency earnings guidance.” According to the Q1 report, consumer demand remained resilient through the period given the heightened inflationary environment. Kerry said customer innovation was primarily focused on new taste profiles, enhancing their products’ nutritional characteristics and providing more value options for consumers. Kerry Group reported revenue increased by 10.3% in the period. This comprised increased business volumes, increased pricing, favourable translation currency, and contribution from business acquisitions net of disposals.
The report details that the Taste and Nutrition segment of Kerry 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, according to Kerry. The report also states that growth in the period within the Food EUM (end user monitoring) 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% in the period, driven by strong growth in the Middle East, Southeast Asia, and Latin America. The global pharma EUM achieved good volume growth, led by a strong performance in cell nutrition. Dairy Ireland’s overall volumes in the period were lower, and pricing was higher given the heightened year-on-year inflationary cost environment. 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.
At the end of March, the group’s net debt of €1.7 billion reflected cash generation and proceeds from the disposal of the Sweet Ingredients portfolio. Kerry has said that 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 in February, the group has proposed a final dividend of 73.4c/share for approval at the Annual General Meeting (AGM).
While market conditions are currently uncertain, Kerry said that it remains strongly positioned for growth with a good innovation pipeline. The group said that it 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 report stated. The group expects to achieve adjusted earnings per share growth in 2023 of 1% to 5% on a constant currency basis.