TIDMKYGA
RNS Number : 3518Q
Kerry Group PLC
27 October 2021
Date: 27 October 2021 LEI: 635400TLVVBNXLFHWC59
KERRY GROUP
Q3 INTERIM MANAGEMENT STATEMENT 2021
Continued Strong Growth and Strategic Development
Kerry reports business performance for the nine months ended 30
September 2021
OVERVIEW
* Business volume growth 8.2% reflecting volume growth
of 6.6% in Q3
- Taste & Nutrition 8.7% (Q3: 6.3%)
- Consumer Foods 5.6% (Q3: 7.5%)
* Pricing 0.7%
* Group trading margin +60bps
- Taste & Nutrition +60bps
- Consumer Foods +20bps
* Earnings guidance for full year reaffirmed
Edmond Scanlon, Chief Executive Officer
"We are pleased with overall performance through the period, reflecting
continued good growth in our retail channel and strong performance
in foodservice. The Americas had good overall volume growth, Europe
delivered an excellent performance, while growth in APMEA remained
strong with varying conditions across the region. A number of our
end use markets had strong performances, with Beverage in particular
achieving excellent growth.
We have made some significant strategic developments through the year.
We further enhanced our position as a market-leading taste & nutrition
company, completing the acquisition of Niacet (1) and the sale of
our Consumer Foods' Meats and Meals business. At our recent Capital
Markets Day, we shared our refreshed strategic priorities, key growth
platforms and mid-term targets, all key enablers of achieving our
vision - to be our customers' most valued partner, creating a world
of sustainable nutrition.
Our outlook for the full year is unchanged and we expect to deliver
strong volume and earnings growth."
(1)Acquired 100% of the issued share capital of Hare Topco, Inc.
trading as Niacet Corp ("Niacet")
Markets and Performance
Overall market conditions have improved through the period ,
with many developed markets seeing a return to more normalised
economic activity. Consumer demand remains strong as retail
continues to perform well, while foodservice experiences a
continued improvement, as consumers embrace the opportunity for
out-of-home social engagement and food consumption. Our markets
remain highly dynamic, as customers seek to address heightened
consumer demands while balancing labour and supply chain
challenges, leading to increased innovation opportunities within
our industry.
Group reported revenue increased by 6.3% in the period,
reflecting a volume increase of 8.2%, increased pricing of 0.7%, an
adverse translation currency impact of 3.6% and net contribution
from acquisitions and disposals of 1.0%.
Group trading profit margin increased by 60bps, reflecting a
60bps improvement in Taste & Nutrition and a 20bps improvement
in Consumer Foods, driven principally by ope rating leverage.
Business Reviews
Taste & Nutrition
Continued good growth in the retail channel and strong overall
growth in foodservice
> Volume growth of 8.7%
> Foodservice volume growth of 21.0% led by performance in Europe
> Retail volume growth of 4.9% led by Beverage and Food EUMs (most notably Meat and Bakery)
> Pricing of 0.7% reflecting increases in input costs
Taste & Nutrition continued its strong growth through the
period, led by continued momentum in the foodservice channel with
increased demand from quick service restaurants in particular,
while also recognising the lower prior year comparatives. The
retail channel continued to deliver good growth supported by
launches incorporating Kerry's authentic taste solutions, proactive
nutrition portfolio and Radicle (TM) plant-based range. There was
an increased level of local innovation through the period and
significant engagement supporting customers to deliver on their
sustainability initiatives. Business volumes in emerging markets
increased by 15.8% with strong growth across all regions. The
acquisition of Niacet (1) was completed on 14(th) September and
integration is underway.
Americas Region
> Overall volume growth of 6.6% with a solid performance in Q3
> Retail channel growth led by Beverage, Snacks and Bakery
> Foodservice channel continued to deliver good growth
North America delivered good overall growth against a backdrop
of supply chain and labour challenges impacting industry
performance through the period. Within the North American retail
channel, the Beverage EUM achieved excellent growth with increased
demand for proactive nutrition, new innovations with taste systems
and natural extracts, and a number of launches in plant-based
beverages. Within the Food EUM, Snacks had good growth supported by
new launches in healthier snacking. Overall performance within Meat
was solid, with strong business development in plant-based
alternatives. Performance in Meals was impacted by product
repositioning in the category, while Bakery delivered good growth
through taste systems and cleaner label solutions.
The foodservice channel continued to deliver good growth, with
significant activity across quick service restaurants, fast casual
and casual dining, as customers continue their efforts to improve
their offerings, while reducing complexity in their back of house
operations. Manufacturing has commenced at our new Rome, Georgia
facility, which will see a significant increase in the level of
operational activity in the coming months.
In LATAM, Brazil achieved strong growth driven by performance in
Beverage and ice-cream. Growth in Mexico was led by strong growth
in Snack applications, while overall performance in CACAR was
solid.
Volumes within the global Pharma EUM were impacted by delays
caused by supply chain issues in the period. The previously
announced acquisition of Natreon (2) is scheduled to complete
before year end.
(2)Kerry have agreed to acquire 100% of the issued share capital
of Natreon, Inc
Europe Region
> Overall volume growth of 10.6% with an exceptionally strong performance in Q3
> Retail channel delivered strong growth led by Meat, Dairy and Bakery
> Foodservice achieved excellent growth with a significant increase in out-of-home consumption
The region delivered strong growth with excellent performances
across a number of end use markets. Growth in the retail channel
was driven by performance within the Food EUM. Meat achieved
excellent growth through a number of plant-based meat alternative
innovations, launches with natural preservation and increased
demand for healthier coating systems. Dairy achieved strong growth
through taste solutions in premium and dairy-free ice cream ranges,
while Bakery & Confectionary delivered a very strong
performance with a number of clean label and indulgent
innovations.
The foodservice channel achieved excellent growth reflecting
lower prior year comparatives, increased consumption and extensions
to menu ranges as the year progressed. Russia and Eastern Europe
delivered excellent growth across both retail and foodservice
channels, led by Meat and Snacks.
APMEA Region
> Overall volume growth of 12.5% with continued strong performance in Q3
> Retail channel delivered strong growth led by Beverage, Meat and Snacks
> Foodservice channel delivered a good overall performance
despite challenging conditions in some local markets
The region delivered a strong overall performance in the period,
led by very good growth in China and the Middle East. In the retail
channel, excellent growth was achieved within the Beverage EUM with
solutions incorporating Kerry's botanicals, natural extracts and
TasteSense (TM) sugar reduction technology in new innovations
across tea, coffee and refreshing beverage. Within the Food EUM,
Meat had strong growth through local authentic taste innovations,
while Snacks performed well as a result of increased demand from
regional leaders for taste solutions.
The foodservice channel delivered strong overall growth led by
performance in Beverage, Meat and Meals, while performance was
impacted in places by local COVID-related restrictions, most
notably in South East Asia. The Group made good progress in the
development of its new Taste facility in Durban in the period.
Consumer Foods
Strong volume growth through the period
> Volume growth of 5.6% - led by meal solutions, dairy snacking and meat-free
> Pricing of 0.3% reflecting increases in input costs and market pricing
Growth in the division reflected a strong performance while
recognising the lower prior year comparatives. Meat delivered good
overall growth in the period, driven by the continued strong
performance of Richmond's meat-free range and the performance of
Fridge Raiders. Chilled meals achieved very strong growth supported
by health & wellness ranges. The sale of the Meat and Meals
business was completed on 27(th) September.
Dairy performed well, led by strong growth in the Strings &
Things snacking range, with the spreadable butter ranges delivering
a good overall performance.
Financial Review
At the end of September, net debt was EUR2.1 billion. The
Group's consolidated balance sheet remains strong which will
facilitate the continued organic and acquisitive growth of the
Group.
Future Prospects
We see strong growth prospects across both the retail and
foodservice channels, underpinned by a very good innovation
pipeline and customer engagement. We will continue to invest for
growth and the enablement of our business model, while pursuing
M&A opportunities aligned to our strategic growth priorities.
The Group continues to expect to deliver strong volume and earnings
growth. Our full year outlook is unchanged and reflects the
expected effect from the strategic portfolio developments as shown
below.
FY 2021 Guidance Range
============================================================== ========
Constant Currency Adjusted EPS guidance - before estimated +12% to
impact of transactions 15%
Estimated contribution from Niacet(1) acquisition c. +1%
Estimated dilution from Consumer Foods Meat & Meals disposal c. -3%
Constant Currency Adjusted EPS guidance - post estimated +10% to
impact of transactions 13%
============================================================== ========
Note: The effect of translation currency at prevailing rates
is expected to be a 2-3% headwind on earnings in FY 2021
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.
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 | media@kerry.com
Website
www.kerrygroup.com
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END
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