TIDMKYGA
RNS Number : 8463V
Kerry Group PLC
08 November 2017
08 November 2017
Kerry Group
Interim Management Statement
08 November 2017 -- Kerry, the global taste & nutrition and
consumer foods group, issues the following Interim Management
Statement for the nine months ended 30 September 2017.
KEY HIGHLIGHTS
-- 4.2% growth in business volumes
- Taste & Nutrition +4.6%
- Consumer Foods +2.5%
-- Pricing +2%
-- Group trading margin maintained
- Taste & Nutrition +20bps
- Consumer Foods (70bps)
-- Strong cash flow
Kerry Group Chief Executive Edmond Scanlon said; "The Kerry
Business Model continues to deliver speedy innovation in response
to the pace of change in the food and beverage industry. We
achieved good volume growth in the first nine months of 2017 and
for the full year, taking into account the 4% currency translation
headwind, we expect to achieve growth in adjusted earnings per
share of 4% to 6% on a reported basis to a range of 336 to 343 cent
per share".
Contact Information
Media
Frank Hayes Director of +353 66 corpaffairs@kerry.ie
Corporate Affairs 7182304
Investor
Relations
Brian Mehigan Chief Financial +353 66 investorrelations@kerry.ie
Officer 7182292
Ronan Deasy Group Financial +353 66 investorrelations@kerry.ie
Controller 7182292
William Head of Investor +353 66 investorrelations@kerry.ie
Lynch Relations 7182292
Website
www.kerrygroup.com
Business Performance
Kerry Group maintained a strong business momentum in Q3 2017,
delivering good volume growth ahead of category growth rates,
driven by successful innovation in response to consumer health and
wellness trends. The continuing positive momentum reflects the
adaptability and agility of Kerry's Business Model in meeting
customer requirements across multiple end-use-markets and
broadening diverse market channels. Nutritional labelling
requirements and demand for clean label, free-from, meat-free,
natural, tasteful food and beverage offerings remain a strong
positive catalyst for differentiated product development.
Investment in pioneering technologies, assisted by Kerry's
Innovation Centre network and 'in-market' Development &
Application Centres, continues to provide significant growth
opportunities through the Group's global, regional and local
customer alliances across developed and developing markets. In
particular, growth across foodservice, convenience and e-tail
channels in all regions continues to present solid innovation
platforms for growth and market development.
Taste & Nutrition Technologies and Systems delivered good
growth in North America, a solid performance in Latin America, good
growth in the EMEA region and continued double digit growth in
Asia.
Despite increasing inflationary pressures in the UK consumer
foods market, Kerry Foods maintained good volume growth -
benefiting in particular from increased snacking trends in dairy
and meat categories.
In the nine months to 30 September 2017 business volumes on a
Groupwide basis increased by 4.2%. Pricing increased by 2% against
a background of approximately 4% higher raw material costs.
Reported revenues increased by 4.5% reflecting the strong business
volume growth, increased pricing, adverse currency translation
impact of 1.9%, adverse currency transaction impact of 0.3% and the
effect of acquisitions net of disposals of 0.5%.
The Group trading margin was maintained, reflecting 20 basis
points improvement in Taste & Nutrition, positive margin
improvement in Kerry Foods offset by adverse sterling exchange
rates resulting in a 70 basis points margin reduction, and an
increased spend on the Kerryconnect Programme.
Business Reviews
Taste & Nutrition
Kerry's global Taste & Nutrition businesses achieved 4.6%
volume growth in the nine months to the end of September. Net
pricing increased by 2%. Divisional trading profit margin increased
by 20 basis points due to successful innovation, improved product
mix and commercial effectiveness programmes.
Americas Region
Business volumes increased by 3.4% in the Americas region.
Despite the impact of consumer trends on 'centre of store' branded
offerings, Kerry maintained good growth in North American markets
through clean label technologies, food preservation systems,
nutritional and taste technologies. Market conditions continued to
improve in Brazil. Mexico continued to provide good growth
opportunities despite more challenging economic conditions.
Development in Central America and the Caribbean region slowed in
the period. The foodservice sector, including fast-casual
restaurants and QSR's in particular, provided a strong platform for
growth across American markets through extended day-part-menus and
'better-for-you' lines of food and beverage convenient offerings.
Food and beverage taste technologies performed well overall, with
solid growth in meat, bakery and clean label beverage lines. Dairy
and culinary technologies maintained strong growth in Brazil.
Growth in sweet snacking and nutritional snack offerings offset the
continued decline in the traditional breakfast cereal category.
Functional Ingredients & Actives maintained good growth through
pharmaceutical and food applications. Wellmune(R) immune enhancing
ingredients continued to achieve strong growth through wider
nutritional applications.
EMEA Region
Sustained focus on 'in-market' customer engagement throughout
the EMEA region and progress through commercial effectiveness
programmes assisted delivery of 3.7% volume growth in the nine
months to end of September 2017. A strong business performance in
the region in Q3 against a soft prior year comparator was assisted
by good growth in the foodservice sector through seasonal launches
and 'limited-time-offerings'. Consumer sentiment showed encouraging
improvement with growing demand for clean label and enhanced
nutritional offerings which provided strong innovation platforms
beyond category growth rates. Foodservice applications grew solidly
through menu extension and the aforementioned seasonal programmes.
With increased focus on sugar and calorie reduction across Europe,
Kerry's 'TasteSense' technologies achieved good growth. The meat
industry continued to provide favourable growth opportunities.
Development of premium lines in the ice cream category also
provided significant innovation opportunities in the sweet sector.
Beverage Taste and Systems achieved strong growth through
foodservice, convenience and coffee chain applications. Good volume
growth was achieved in the savoury and meat sectors in Russia.
Market conditions in Sub-Saharan Africa and Middle Eastern markets
demonstrated positive improvement in the savoury and beverage
sectors. Strong butterfat demand and lower dairy exports from some
exporting countries contributed to improved returns from
international dairy markets.
Asia-Pacific Region
Excellent growth and market development was maintained in the
Asia-Pacific region. Business volumes in the nine months to end of
September increased by 10.9%. Strong growth was achieved in the
foodservice sector throughout the region, in particular in China
and South East Asia. Savoury and dairy technologies performed well
in Indonesia, the Philippines, Vietnam and Thailand. Savoury
applications also grew well in Australia and New Zealand. DaVinci
branded beverage systems continued to progress market development
in the region. The fast growing convenience and foodservice
channels in Japan, China and Thailand provided good growth
opportunities for liquid beverage systems. Wellmune(R) maintained
solid growth in the regional nutritional beverage sector.
Businesses acquired in the region in 2017 performed in line with
expectations. In March, Taste Master was acquired in Australia
strengthening the Group's taste capabilities in the beverage,
snack, meat and culinary industries. The acquisition of Tianning
Flavours was completed in April extending Kerry's savoury and sweet
flavour development capabilities in China.
Consumer Foods
The Group's consumer foods business performed well against a
background of increasing inflationary pressures in the UK market,
sterling volatility following the UK electorate decision to leave
the EU, and increased market fragmentation with the continued
expansion of discounter retail chains. In the nine months to end of
September business volumes grew by 2.5%. With a continuing focus on
significant raw material price inflation recovery, pricing
increased by 1.9%. The divisional trading profit margin decreased
by 70 basis points as the underlying business margin improvement
was offset by adverse sterling exchange rate movements.
Double digit growth was achieved in the UK market through
branded meat and dairy snacking lines including 'Fridge Raiders'
and 'Cheestrings'. Cheestrings also continued to extend its market
positioning in mainland Europe. The UK sausage category proved
challenging where the relaunch of 'Richmond' assisted brand share.
The cooked meats category in the UK and Ireland also proved highly
competitive. Kerry Foods meal solutions lines maintained a good
performance. In the chilled sector good growth was achieved through
ethnic meals and the foodservice channel provided encouraging
prospects for frozen meals. Good growth was achieved through butter
based spreads in the UK private label spreads category and
'Dairygold' maintained brand share in the Irish market.
Financial Review
Net debt at the end of the period stood at EUR1.3 billion
similar to the year end 2016 level.
Strategic Development
As recently announced, the Group completed the acquisition of
Ganeden(R) - a leading technology innovation company focused on
patented probiotics and related technologies. Ganeden(R) based in
Cleveland, Ohio, has an extensive library of published studies and
more than 135 patents for technologies in the supplement, food,
beverage, nutrition and personal care markets.
In October, the Group also acquired Mississippi, US based
Dottley Spice, a leading supplier of seasonings and coatings to the
meat processing industry and foodservice sector in North
America.
Agreement has also been reached to acquire the US based Kettle
business of Tyson Foods, a leading provider of culinary systems and
custom solutions to the foodservice channel in North America.
Operating from a production and development facility in Fort Worth,
Texas; the Kettle business has a strong heritage in the fast
growing foodservice industry and well established key national
customer alliances in particular in the QSR and casual restaurant
sectors. The transaction which is subject to regulatory approval is
expected to be completed by year end.
Board Changes
The Board has appointed Mr Philip Toomey as Chairman Designate
to succeed present Chairman Mr Michael Dowling who will retire from
the Board at the Group's Annual General Meeting in May 2018.
Michael Dowling was appointed Chairman of the Board in 2015 and has
served as a Director since 1998.
Philip Toomey was appointed to the Board in February 2012. On
the same date he was appointed as Senior Independent Director to
the Board and as a member of the Audit Committee. He was appointed
Chairman of the Audit Committee in February 2013.
Philip Toomey was formerly Global Chief Operating Officer for
the financial services industry practice at Accenture and has a
wide range of international consulting experience. He was also a
member of the Accenture Global Leadership Council. He is a Fellow
of Chartered Accountants Ireland and a Board member of UDG
Healthcare plc to which he was appointed in 2008.
The appointment of Philip Toomey as Chairman Designate follows a
selection process by the Nomination Committee of the Board led by
James C. Kenny.
Future Prospects
For the full year, taking into account the 4% currency
translation headwind, we expect to achieve growth in adjusted
earnings per share of 4% to 6% on a reported basis to a range of
336 to 343 cent per share (2016: 323.4 cent).
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 Company 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 company news service from the London Stock Exchange
END
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