TIDMKYGA
RNS Number : 8188X
Kerry Group PLC
02 May 2019
02 May 2019
Kerry Group
Q1 Interim Management Statement
Kerry, the global taste & nutrition and consumer foods
group, issues the following Interim Management Statement for the
first quarter ended 31 March 2019. This statement is issued in
conjunction with the Group's Annual General Meeting which is being
held today.
FIRST QUARTER HIGHLIGHTS
-- Business volume growth +3.3%
- Taste & Nutrition +3.8%
- Consumer Foods +0.8%
-- Pricing -0.2%
-- Reported Revenue +10.3%
-- Group trading margin +10bps
- Taste & Nutrition +10bps
- Consumer Foods -10bps
-- Earnings guidance for full year reaffirmed
Edmond Scanlon - Chief Executive Officer Statement
"We have made a solid start to the year with overall business
performance in line with expectations. The Group continued to
deliver volume growth ahead of the market while expanding trading
margin. We are pleased with our innovation pipeline and the
continued enhancement of our product mix. Our industry-leading
business model and unique taste and nutrition positioning continue
to deliver significant value for our customers in meeting rapidly
evolving consumer needs. The recently announced acquisitions have
performed very well and we are pleased with the progress made on
their integration. In summary, we are encouraged by our progress in
the quarter and reaffirm our full year 2019 guidance of adjusted
earnings per share growth of 6% to 10% in constant currency."
Contact Information
Media
Catherine Keogh VP Corporate Affairs +353 66 7182304 corpaffairs@kerry.ie
& Communications
Investor Relations
Marguerite Chief Financial +353 66 7182292 investorrelations@kerry.ie
Larkin Officer
William Lynch Head of Investor +353 66 7182292 investorrelations@kerry.ie
Relations
Website
www.kerrygroup.com
Group Performance & Markets
Group reported revenue increased by 10.3%, reflecting business
volume growth of 3.3%, a pricing decrease of 0.2% due to lower raw
material prices on average across the period, acquisition
contribution of 4.7%, and a favourable translation currency impact
of 2.5%. Group trading profit increased by 10bps, reflecting a
10bps improvement in Taste & Nutrition, an adverse 10bps in
Consumer Foods and increased net investment on the KerryExcel
programme.
Consumer demand for 'food for life and wellbeing', 'new taste
experiences' and 'made for me' continue to be noteworthy drivers of
innovation. Kerry's industry-leading taste and nutrition technology
portfolio and unique business model continue to drive significant
value for our customers as they seek to meet these rapidly evolving
consumer demands and increase speed to markets.
Business Reviews
Taste & Nutrition
-- Volume growth of 3.8% driven by Meat, Snacks and Dairy End Use Markets (EUMs)
-- Pricing -0.1% reflective of customer partnership agreements
with relatively neutral raw material costs
-- Trading profit margin +10bps - good underlying growth driven
mainly by enhanced product mix, operating leverage and
efficiencies, offset by investments and Brexit risk-mitigation
costs
Kerry's nutrition and wellbeing technology portfolio had a
strong performance in the period, as demand for great-tasting
products with improved nutritional attributes continued to
accelerate across the globe. Our unique taste and nutrition
positioning, food science expertise and deep understanding of the
intersection of taste and nutrition attributes mean more customers
are seeing Kerry as their key innovation partner. This has led to
good sales growth in customised solutions incorporating in
particular Kerry's fermented ingredients, broad protein portfolio,
probiotics, botanicals and natural extracts.
Developing market growth continued to be strong at 9.0%, with
developing APMEA being the main driver. Foodservice performed well
in the quarter, growing at 5.1% with the North American market a
little softer at the beginning of the year. The Group completed the
acquisitions of Southeastern Mills (SEM) and Ariake USA Inc in the
period.
Americas Region
-- 2.6% volume growth
-- Solid performance in North America, driven by Meat, Snacks and Dairy EUMs
-- LATAM performed well
In North America, Kerry's Meat EUM enjoyed another strong
quarter, as our industry-leading portfolio continued to support
customers as they innovate to meet consumer demands for new
regional flavours, cleaner labels, natural shelf-life preservation
and plant-based alternatives. This performance was complemented by
the acquisition of Southeastern Mills (SEM), which performed well
in the period. The Snacks EUM delivered good growth through
healthier snacking and new world taste experiences. The Dairy EUM
benefitted from the ongoing evolution of the ice cream category
towards premiumisation, alomg with lower-calorie offerings. The
Foodservice channel had a soft start to the year, which impacted
performance in the Beverage and Meals EUMs.
In LATAM, Brazil performed well particularly in the Dairy and
Beverage EUMs, while Mexico's performance was led by good growth in
the Snacks EUM. The global Pharma EUM had a solid performance,
whilst impacted by the timing of customer orders in the quarter.
The recently acquired Fleischmann's business (FVC) performed well
and the Group also completed the acquisition of Ariake USA Inc at
the end of the period.
Europe Region
-- 2.4% volume growth
-- Strong performance in Beverage, with good growth in Meat and Snacks EUMs
-- Northern Europe and Russia delivered strong growth
The region delivered a good performance in the quarter, led by
strong growth in the Beverage EUM, as Kerry continued to support
customers as they improve their product ranges. This growth was
broad-based, as Foodservice customers enhanced their beverage
offerings across their menus, a number of launches incorporated
Kerry's botanicals and natural extracts capabilities, and
non-alcoholic launches also featured Kerry's brewing and taste
technologies. The Meat EUM performed very well, with multi-texture
coating systems delivering new sensorial taste experiences, along
with further growth through 'better-for-you' launches. Good
business development was also achieved in plant-based meat
alternatives, as Kerry's offering was enhanced by the recent JV
with Ojah. The Snacks EUM performed well, with strong demand for
innovations incorporating Kerry's Ganeden probiotic technology.
Northern Europe and Russia had particularly strong growth, led by
local and regional customers.
APMEA Region
-- 9.3% volume growth
-- Strong performance in Meat, Beverage and Snacks EUMs
-- Continued strategic expansion and business development
The APMEA region delivered another strong performance, with
broad-based growth across the region led by China. The Meat EUM
delivered excellent growth with a range of new innovations to meet
key consumer preferences for local authentic taste, value and food
safety. The Beverage EUM performed very well, particularly in the
Foodservice channel as customers continue to broaden their menu
offerings to target new and evolving consumption occasions. Strong
growth was achieved through the branded DaVinci range into
independent distributors. The dynamic Snacks EUM delivered very
good growth, as the category continued to evolve at pace to meet
consumer demand for new world taste experiences. We continue to
make good progress in expanding our capacity and processing
capabilities in the region, with ongoing strategic investments in
China, India and the Middle East.
Consumer Foods
-- Volume growth of 0.8%
-- Pricing of -0.3% reflecting primarily lower raw material input costs
-- Trading profit margin -10bps impacted by Brexit risk-mitigation costs
The division had a solid performance in the context of a subdued
marketplace. 'Everyday Fresh' performed in line with expectations,
with growth in Meat offset by challenges within the Dairy
sub-category. The Richmond brand had solid growth particularly with
chicken sausages, along with the Denny brand in Ireland. The
traditional spreads category continued to be challenged, however
Kerry had solid growth in spreadable butter. Within 'Convenience
Meal Solutions' the chilled meals sub-category continued to be
impacted by reduced promotional activity, while the frozen meals
sub-category had a good performance across the range. 'Food to Go'
performed well, as strong growth in Cheestrings was complemented by
a number of new listings at the end of the quarter. Fridge Raiders
also extended their snacking range to reach a broader consumer
market. The realignment for growth programme announced in February
is progressing to plan.
Financial Review
At the end of March net debt was EUR1.9 billion, reflecting the
acquisitions completed in the period. The Group's consolidated
balance sheet remains strong which will facilitate the continued
organic and acquisitive growth of Group businesses.
Future Prospects
The Group reaffirms its full year 2019 guidance of adjusted
earnings per share growth of 6% to 10% on a constant currency
basis.
Disclaimer: Forward-Looking Statements
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 Group undertakes no obligation to publicly update
any forward-looking statement, whether as a result of new
information, future events or otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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