REG - Kerry Group PLC - KERRY GROUP INTERIM MANAGEMENT REPORT 2024
31/07/2024 07:00
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RNS Number : 4775Y Kerry Group PLC 31 July 2024
31 July
2024
LEI: 635400TLVVBNXLFHWC59
KERRY GROUP
HALF YEAR RESULTS 2024
Strong H1 Performance & Guidance Upgrade
HIGHLIGHTS
> Group revenue of €3.9bn
> Taste & Nutrition volume growth of 3.1% (Q2: +3.2%) | Group
volumes +1.7% (Q2: +1.5%)
> Taste & Nutrition EBITDA margin +130bps | Group +160bps
> Dairy Ireland EBITDA of €35m (H1 2023: €29m)
> Group EBITDA of €552m (H1 2023: €518m)
> Adjusted EPS of 194.1 cent, up 9.1% on a constant currency basis
(7.8% reported currency growth)
> Free cash flow of €445m reflecting 131% cash conversion
> Interim dividend per share increase of 10.1% to 38.1 cent
> Share repurchases of €279m in H1 | Intention to initiate a
further programme
> Full year constant currency adjusted EPS guidance range of 7% to
10%
Edmond Scanlon, Chief Executive Officer
"We are pleased to report a good performance across the first half of the
year. Taste & Nutrition delivered good volume growth ahead of our end
markets, with strong profit growth and margin expansion across the business,
contributing to our earnings per share growth of 9.1% in the period.
Taste & Nutrition volume growth was led by strong performances in the
foodservice channel across all three regions, as we continue to support
established foodservice chains evolve and develop their businesses, while
working with emerging leaders to upscale their operations and offerings.
Volume growth in the retail channel was driven by good performances in the
Americas and APMEA, led by very strong growth in Snack applications with
Kerry's leading range of savoury taste profiles and Tastesense(®)
salt-reduction technologies.
From a capital allocation perspective, we continued to invest to support the
organic development of our business, while also completing the Lactase enzymes
business acquisition and progressing our share repurchase activity through the
period.
Given the strength of our financial performance and our innovation pipeline,
today we are updating our full year constant currency adjusted earnings per
share guidance to 7% to 10%."
Markets and Performance
The demand environment across food & beverage markets remained relatively
muted through the first half of the year, given the recent inflation across
many geographies. Customer innovation activity focused mainly on new taste
profiles and relative value options, along with product renovation to enhance
nutritional characteristics of food and beverage products, while many
customers initiated measures to stimulate growth towards the end of the period
through increased promotional and advertising activity.
Group revenue of €3.9 billion in the period comprised volume growth of 1.7%,
pricing deflation of 4.0%, unfavourable translation currency of 0.9% and the
effect from disposals net of acquisitions of 2.7% resulting in lower reported
revenue for the period of 5.9%. Group EBITDA increased by 6.6% to €552m.
Group EBITDA margin increased by 160bps to 14.2%, driven by benefits from the
Accelerate Operational Excellence Programme, a positive impact from portfolio
developments, operating leverage, product mix, and the net effect from
pricing.
Constant currency adjusted earnings per share increased by 9.1% to 194.1 cent
and an increase of 7.8% in reported currency. Basic earnings per share
decreased to 166.7 cent (H1 2023: 201.7 cent) primarily reflecting the profit
on disposal of businesses and assets in the prior year.
Free cash flow of €445m (H1 2023: €232m) represented cash conversion of
131%, driven by increased profit and an improvement in working capital on an
average basis. The interim dividend of 38.1 cent per share reflects an
increase of 10.1% over the 2023 interim dividend. During the period, the Group
repurchased €279m of Kerry Group plc 'A' ordinary shares as part of its
Share Buyback Programmes. Given good cash generation and current market
conditions, the Group intends to initiate a further programme post the
completion of the current programme.
Business Reviews
Taste & Nutrition
Volume growth led by strong foodservice performance
H1 2024 Performance
Revenue €3,419m +3.1%(1)
EBITDA €551m +5.5%
EBITDA margin 16.1% +130bps
(1) volume performance
> Volume growth of 3.1% (Q2: +3.2%) was ahead of end markets
> Growth led by Snacks, Meals and Beverage EUMs
> Pricing -3.0% (Q2: -2.2%) reflected some input cost deflation
> EBITDA margin expansion of 130bps driven by cost efficiencies,
portfolio developments, operating leverage, product mix and the net effect of
pricing
Taste & Nutrition delivered good volume growth ahead of its end markets,
which remained relatively muted through the period. Foodservice continued to
perform strongly with volume growth of 7.3%, supported by new menu
innovations, seasonal products and solutions to reduce operational cost and
complexity, while growth in the retail channel reflected good performances in
the Americas and APMEA.
Growth in the period was led by innovations incorporating Kerry's range of
taste and proactive health technologies. This was supported by strong
performance across savoury taste, botanicals and natural extracts,
Tastesense(®) salt and sugar reduction technologies, as well as proactive
health technologies for digestive and cognitive need states in particular.
Volume growth in food protection and preservation was driven by new clean
label launches in food applications.
Business volumes in emerging markets increased by 6.6% in the period, led by
strong growth in the Middle East and Africa.
Within the global Pharma EUM, growth in excipients was more than offset by
phasing of volumes in cell nutrition.
The previously announced carve-out acquisition of part of the global lactase
enzyme business of Novonesis (formerly Chr. Hansen Holding A/S and Novozymes
A/S) was completed during the period. This acquisition(2) is strongly aligned
to Kerry's recent strategic enhancement of its biotechnology capabilities,
while extending Kerry's enzyme manufacturing capabilities and footprint to
three continents with its focus on food, beverage and pharma applications.
(2) See note 10 - Business Combinations in the Notes to the Condensed Interim
Financial Statements for details.
Americas Region
> Volumes +3.4% (Q2: +3.2%)
> Growth led by Snacks, Meals and Bakery EUMs
> Retail achieved good growth with continued strong growth in
Foodservice
> LATAM growth led by Mexico
Reported revenue in the Americas region of €1,890m reflected good
broad-based volume growth across end markets.
Within North America, Snacks achieved excellent growth with new business wins
incorporating Kerry's leading range of savoury taste profiles and
Tastesense(®) salt-reduction technologies. Meals delivered good growth
through a number of new culinary taste launches across both retail and
foodservice channels. Growth in Bakery was supported by performance in
preservation and taste systems. Beverage performed well across botanicals,
coffee extracts and Tastesense(®) sugar reduction technologies, with growth
in functional beverage driven by Kerry's proactive health technologies.
Foodservice delivered strong volume growth in the period, supported by
innovations with quick service restaurants, fast-casual outlets and coffee
chains, while good growth in the retail channel was achieved across both
customer and retailer brands.
Within LATAM, good growth was achieved in Mexico across Beverage and Snacks,
with Brazil delivering a solid performance.
Europe Region
> Volumes -1.0% (Q2: -0.5%) against strong comparatives
> Meals and Beverage achieved good growth
> Foodservice performed well while the retail channel reflected soft
market dynamics
Reported revenue in the Europe region of €708m reflected strong comparatives
and market conditions, particularly in the retail channel given recent
inflation across the region.
Within the Food EUM, Meals delivered good growth through solutions
incorporating Kerry's food protection, preservation and authentic taste
technologies, while performance in Dairy and Snacks reflected strong prior
year comparatives. Beverage performed well in functional and refreshing
beverages supported by a number of new innovations with Kerry's proactive
health portfolio.
Foodservice continued to deliver good growth supported by launches in meat and
beverage applications with a number of customers, combined with increased
seasonal and limited time offering activity across the region.
APMEA Region
> Volumes +5.5% (Q2: +6.2%)
> Snacks, Meat and Beverage delivered good growth
> Foodservice achieved strong growth with good growth in retail
Reported revenue in the APMEA region of €794m reflected strong growth in the
Middle East and Africa, with volumes in China broadly similar to the prior
year and Southeast Asia improving in the period.
Snacks delivered very strong growth across leading global and regional brands,
through innovations and increased demand for Kerry's range of authentic local
savoury taste profiles. Good growth was achieved in Meat through taste and
preservation systems, while Beverage performed well with refreshing beverage
innovations.
Foodservice delivered very strong volume growth with leading regional coffee
chains and quick service restaurants. Growth in the retail channel was
supported by strong demand for Kerry's range of local authentic taste
solutions with regional leaders in particular.
Dairy Ireland
Good EBITDA Performance led by Dairy Consumer Products
H1 2024 Performance
Revenue €592m -1.9%(1)
EBITDA €35m +19.9%
EBITDA margin 5.9% +160bps
(1) volume performance
The segment achieved a good EBITDA performance of €35m with margin expansion
of 160bps in the first half of the year. This was driven by Dairy Consumer
Products' growth and mix development as well as recovery in Dairy Ingredients.
Revenue for the first half of the year of €592m included volumes of -1.9%
and pricing of -6.9%. Dairy Consumer Products performed well, with volume
growth led by Kerry's snacking and branded cheese ranges. Dairy Ingredients'
volumes reflected softer overall supply across the period given local market
conditions.
During the period, Dairy Consumer Products increased its Cheestrings
manufacturing capacity with the commissioning of its extended plant in
Charleville, Ireland and also launched the new SMUG hybrid range of oat and
dairy-based milk, cheese and butter products.
Financial Review
% H1 2024 H1 2023
change €'m €'m
Revenue (5.9%) 3,880.4 4,121.6
EBITDA 6.6% 552.2 518.0
EBITDA margin 14.2% 12.6%
Depreciation (net) (113.0) (109.0)
Computer software amortisation (18.0) (15.6)
Finance costs (net) (27.8) (27.5)
Share of joint ventures' results after taxation (1.0) (0.7)
Adjusted earnings before taxation 392.4 365.2
Income taxes (excluding non-trading items) (53.1) (45.8)
Adjusted earnings after taxation 339.3 319.4
Brand related intangible asset amortisation (27.6) (26.5)
Non-trading items (net of related tax) (20.2) 65.0
Profit after taxation 291.5 357.9
Attributable to:
Equity holders of the parent 291.5 358.2
Non-controlling interests - (0.3)
291.5 357.9
EPS EPS
cent cent
Basic EPS (17.4%) 166.7 201.7
Brand related intangible asset amortisation 15.8 14.9
Non-trading items (net of related tax) 11.6 (36.6)
Adjusted EPS 7.8% 194.1 180.0
Impact of exchange rate translation 1.3%
Adjusted EPS growth in constant currency 9.1%
See Financial Definitions section for definitions, calculations and
reconciliations of Alternative Performance Measures.
Revenue
The table below presents the revenue performance components for the Group and
reporting segments.
Reported
H1 2024 Volume Price Currency(3) Acquisitions Disposals Revenue
Taste & Nutrition 3.1% (3.0%) (1.1%) 0.7% (3.1%) (3.4%)
Dairy Ireland (1.9%) (6.9%) 0.4% - (3.8%)(4) (12.2%)
Group 1.7% (4.0%) (0.9%) 0.6% (3.3%) (5.9%)
Reported
H1 2023 Volume Price Currency(3) Acquisitions Disposals Revenue
Taste & Nutrition 1.4% 5.4% (0.1%) 1.3% (5.3%) 2.7%
Dairy Ireland (2.5%) 0.4% (0.9%) - - (3.0%)
Group 0.6% 4.5% (0.1%) 1.1% (4.5%) 1.6%
(3) This includes the impact of transaction and translation currency - see
financial definitions for further breakdown.
(4) Reduction in revenue reflects changes in contractual arrangements
implemented in the current year, where Dairy Ireland has become an agent, in
accordance with IFRS 15 'Revenue from Contracts with Customers'. The related
revenue in H1 2024 amounted to €1m (H1 2023: €26m).
EBITDA & Margin %
Group EBITDA increased by 6.6% to €552.2m (H1 2023: €518.0m). Reported
EBITDA margin of 14.2% (H1 2023: 12.6%) increased by 160bps primarily driven
by the benefits from the Accelerate Operational Excellence Programme,
portfolio developments, operating leverage, product mix and the net effect of
pricing. The EBITDA margin by business segment was 16.1% in Taste &
Nutrition and 5.9% in Dairy Ireland in the period.
Finance Costs (net)
Finance costs (net) were €27.8m similar to the prior period (H1 2023:
€27.5m). Interest income increased year on year due to interest on the
vendor loan note and higher deposit interest rates, offset by increased
borrowing rates on floating rate debt and overdrafts.
Taxation
The tax charge for the period before non-trading items was €53.1m (H1 2023:
€45.8m) representing an effective tax rate of 14.5% (H1 2023: 13.5%) and
reflective of the geographical mix of earnings.
Non-Trading Items
During the period, the Group incurred an overall non-trading charge of
€20.2m (H1 2023: €65.0m credit) net of tax. The charge in the period is
primarily related to the Accelerate Operational Excellence Transformation
Programme. The credit in the prior year related to the profit on sale of the
business/assets primarily related to the Sweet Ingredients Portfolio
divestment offset by a charge relating to the Accelerate Operational
Excellence Transformation Programme.
Foreign Exchange Rates
Group results are impacted by year on year fluctuations in exchange rates
versus the euro. The primary rates driving the currency impact in the figures
above were USD and GBP which had average rates of 1.09 (2023: 1.05) and 0.86
(2023: 0.85) respectively.
Return on Average Capital Employed (ROACE)
Group ROACE at the period end was 10.3% (H1 2023: 10.2%) reflective of the
increase in profits in the period and the movement in average capital
employed.
Free Cash Flow
The Group achieved free cash flow of €445.4m in H1 2024 (H1 2023: €231.9m)
reflecting 131% cash conversion in the period primarily driven by increased
profit and an improvement in average working capital in the first six months
of 2024 compared to the average working capital during the first six months of
2023. Net cash from operating activities for the period was €367.0m (H1
2023: €309.7m) reflective of the increased profits partially offset by an
investment in working capital of €87.6m since the year end, predominately
related to the seasonal nature of the Dairy Ireland business.
H1 2024 H1 2023
Free Cash Flow €'m €'m
EBITDA 552.2 518.0
Movement in average working capital 79.5 (103.2)
Pension contributions paid less pension expense (2.4) (2.7)
Finance costs paid (net) (14.2) (19.5)
Income taxes paid (49.5) (55.0)
Capital expenditure (net) (120.2) (105.7)
Free cash flow 445.4 231.9
Cash conversion(5) 131% 73%
(5) Cash conversion is free cash flow expressed as a percentage of adjusted
earnings after taxation.
Net Debt
Net debt at the end of the period was €1,843.9m (31 December 2023:
€1,604.1m). The increase relative to December reflects strong business cash
generation offset by acquisition spend, dividends and the Share Buyback
Programme.
Liquidity Analysis
The Group's balance sheet is in a strong position with a Net debt to EBITDA
ratio of 1.6 times.
H1 2024 H1 2023
Times Times
Net debt: EBITDA 1.6 1.6
EBITDA: Net interest 23.2 19.0
Principal Risks and Uncertainties
Details of the principal risks and uncertainties facing the Group can be found
in the 2023 Annual Report on pages 97 to 103 and continue to be the principal
risks and uncertainties facing the Group for the remaining six months of the
financial year. These risks include but are not limited to; portfolio
management, business acquisition and divestiture, climate change and
environmental, people, business ethics and social responsibility, food safety,
quality and regulatory, health & safety, margin management, cyber and
information systems security, operational and supply chain resilience,
intellectual property, taxation and treasury. The Group continues to manage
the interdependency of these risks and actively manages all risks through its
control and risk management process.
Share Buyback Programme
In May 2024, the Board approved a new Share Buyback Programme of up to €300
million. The Share Buyback Programme is underpinned by the Group's strong
balance sheet and cash flow and is aligned to Kerry's Capital Allocation
Framework. The programme commenced on 7 May 2024 and will end no later than 19
December 2024. In the period from 7 May 2024 to 30 June 2024 the Company
purchased 1,035,583 shares at a total cost of €80.1m.
The €300 million Share Buyback Programme announced in October 2023,
commenced on 1 November 2023 and was completed by 30 April 2024. In the period
to 30 June 2024, the Company acquired 2,481,191 shares at a cost of €198.6m
resulting in a total number of shares acquired as part of this programme of
3,854,452 at a total cost of €300.3m including transaction costs of €0.3m.
Dividend
The Board has declared an interim dividend of 38.1 cent per share, compared to
the prior year interim dividend of 34.6 cent, payable on 8 November 2024 to
shareholders on the record date 11 October 2024.
Future Prospects
Kerry has a good innovation pipeline and remains well positioned for good
volume growth and strong margin expansion, while recognising consumer market
demand remains relatively subdued.
The Group will continue to develop its business and portfolio aligned to its
strategic priorities.
Given financial performance in the first half of the year and Kerry's
innovation pipeline, the Group is updating its full year constant currency
adjusted earnings per share guidance to 7% to 10%(6) (previously 5.5% to
8.5%).
(6) Foreign currency translation expected to be a headwind of ~1% on earnings
per share in the full year. Guidance based on average number of shares in
issue of ~173m.
Responsibility Statement
The Directors are responsible for preparing the Half Yearly Financial Report
in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007
as amended ('the Regulations'), the Central Bank (Investment Market Conduct)
Rules 2019, the Disclosure Guidance and Transparency Rules of the UK's
Financial Conduct Authority and with IAS 34 'Interim Financial Reporting' as
issued by IASB and as adopted by the European Union.
The Directors confirm that to the best of their knowledge:
> the Group Condensed Consolidated Interim Financial Statements for
the half year ended 30 June 2024 have been prepared in accordance with the
international accounting standard applicable to interim financial reporting
adopted pursuant to the procedure provided for under Article 6 of the
Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of
19 July 2002;
> the Interim Management Report includes a fair review of the
important events that have occurred during the first six months of the
financial year, and their impact on the Group Condensed Consolidated Interim
Financial Statements for the half year ended 30 June 2024, and a description
of the principal risks and uncertainties for the remaining six months; and
> the Interim Management Report includes a fair review of the related
party transactions that have occurred during the first six months of the
current financial year and that have materially affected the financial
position or the performance of the Group during that period, and any changes
in the related parties' transactions described in the last Annual Report that
could have a material effect on the financial position or performance of the
Group in the first six months of the current financial year.
On behalf of the Board
Edmond Scanlon Marguerite Larkin
Chief Executive Officer Chief Financial Officer
30 July 2024
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 Officer
+353 45 930585 | corpaffairs@kerry.com
Website
www.kerry.com
RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2024
Kerry Group plc
Condensed Consolidated Income Statement
for the half year ended 30 June 2024
Before
Non-Trading Non-Trading Half year Half year Year
Items Items ended ended ended
30 June 2024 30 June 2024 30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Unaudited Unaudited Audited
Notes €'m €'m €'m €'m €'m
Continuing operations
Revenue 2 3,880.4 - 3,880.4 4,121.6 8,020.3
Earnings before interest, tax, depreciation and amortisation 2 552.2 - 552.2 518.0 1,165.1
Depreciation (net) and intangible asset amortisation 2 (158.6) - (158.6) (151.1) (299.1)
Non-trading items 3 - (24.3) (24.3) 40.5 8.8
Operating profit 393.6 (24.3) 369.3 407.4 874.8
Finance income 4 11.4 - 11.4 5.7 21.8
Finance costs 4 (39.2) - (39.2) (33.2) (72.1)
Share of joint ventures' results after taxation (1.0) - (1.0) (0.7) (1.9)
Profit before taxation 364.8 (24.3) 340.5 379.2 822.6
Income taxes (53.1) 4.1 (49.0) (21.3) (94.5)
Profit after taxation 311.7 (20.2) 291.5 357.9 728.1
Attributable to:
Equity holders of the parent 291.5 358.2 728.3
Non-controlling interests - (0.3) (0.2)
291.5 357.9 728.1
Earnings per A ordinary share Cent Cent Cent
- basic 5 166.7 201.7 410.4
- diluted 5 166.5 201.5 409.7
Condensed Consolidated Statement of Comprehensive Income
for the half year ended 30 June 2024
Half year Half year Year
ended ended ended
30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Audited
€'m €'m €'m
Profit after taxation 291.5 357.9 728.1
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Fair value movements on cash flow hedges 6.3 1.5 (1.6)
Cash flow hedges - reclassified to profit or loss from equity (0.3) 0.4 1.3
Net change in cost of hedging 0.3 0.5 0.1
Deferred tax effect of fair value movements on cash flow hedges (1.0) (0.4) (0.4)
Exchange difference on translation of foreign operations 90.9 (89.4) (129.0)
Cumulative exchange difference on translation recycled on disposal - (0.7) (1.5)
Items that will not be reclassified subsequently to profit or loss:
Re-measurement on retirement benefits obligation 9.8 (27.1) (33.5)
Deferred tax effect of re-measurement on retirement benefits obligation (2.4) 6.6 7.1
Net income/(expense) recognised directly in total other comprehensive income 103.6 (108.6) (157.5)
Total comprehensive income 395.1 249.3 570.6
Attributable to:
Equity holders of the parent 395.1 249.6 570.8
Non-controlling interests - (0.3) (0.2)
395.1 249.3 570.6
Condensed Consolidated Balance Sheet
as at 30 June 2024
30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Audited
Notes €'m €'m €'m
Non-current assets
Property, plant and equipment 2,199.7 2,068.8 2,133.0
Intangible assets 5,859.4 5,686.5 5,749.8
Financial asset investments 52.4 54.9 52.0
Investments in joint ventures 38.8 41.1 39.8
Other non-current financial instruments 7 138.3 125.7 125.0
Retirement benefits asset 8 100.3 96.2 98.0
Deferred tax assets 82.9 75.7 80.2
8,471.8 8,148.9 8,277.8
Current assets
Inventories 1,185.0 1,312.7 1,100.2
Trade and other receivables 1,380.3 1,329.6 1,279.0
Cash at bank and in hand 9 659.5 660.8 943.7
Other current financial instruments 5.3 19.3 13.7
Assets classified as held for sale 1.1 0.6 1.5
3,231.2 3,323.0 3,338.1
Total assets 11,703.0 11,471.9 11,615.9
Current liabilities
Trade and other payables 1,904.6 1,780.1 1,773.1
Borrowings and overdrafts 9 0.4 1.3 37.1
Other current financial instruments 8.8 8.5 7.5
Tax liabilities 165.4 172.3 173.0
Provisions 13.0 12.8 18.3
Deferred income 4.3 4.2 4.5
2,096.5 1,979.2 2,013.5
Non-current liabilities
Borrowings 9 2,434.1 2,426.5 2,432.6
Other non-current financial instruments 9 13.6 16.1 9.7
Retirement benefits obligation 8 40.4 53.1 49.7
Other non-current liabilities 123.4 135.1 132.4
Deferred tax liabilities 410.5 432.1 394.2
Provisions 55.8 57.8 46.4
Deferred income 14.4 14.1 14.6
3,092.2 3,134.8 3,079.6
Total liabilities 5,188.7 5,114.0 5,093.1
Net assets 6,514.3 6,357.9 6,522.8
Equity
Share capital 11 21.5 22.1 21.9
Share premium 398.7 398.7 398.7
Other reserves 68.5 (8.4) (44.6)
Retained earnings 6,024.1 5,944.1 6,145.3
Equity attributable to equity holders of the parent 6,512.8 6,356.5 6,521.3
Non-controlling interests 1.5 1.4 1.5
Total equity 6,514.3 6,357.9 6,522.8
Condensed Consolidated Statement of Changes in Equity
for the half year ended 30 June 2024
Attributable to equity holders of the parent
Non-
Share Share Other Retained Controlling Total
Capital Premium Reserves Earnings Total Interests Equity
Note €'m €'m €'m €'m €'m €'m €'m
At 1 January 2023 22.1 398.7 64.3 5,736.8 6,221.9 1.7 6,223.6
Profit after taxation - - - 358.2 358.2 (0.3) 357.9
Other comprehensive expense - - (87.7) (20.9) (108.6) - (108.6)
Total comprehensive (expense)/income - - (87.7) 337.3 249.6 (0.3) 249.3
Dividends paid 6 - - - (130.0) (130.0) - (130.0)
Share-based payment expense - - 15.0 - 15.0 - 15.0
At 30 June 2023 - unaudited 22.1 398.7 (8.4) 5,944.1 6,356.5 1.4 6,357.9
Profit after taxation - - - 370.1 370.1 0.1 370.2
Other comprehensive expense - - (43.0) (5.9) (48.9) - (48.9)
Total comprehensive (expense)/income - - (43.0) 364.2 321.2 0.1 321.3
Shares (purchased)/cancelled during the financial period (0.2) - 0.2 (101.7) (101.7) - (101.7)
Dividends paid 6 - - - (61.3) (61.3) - (61.3)
Share-based payment expense - - 6.6 - 6.6 - 6.6
At 31 December 2023 - audited 21.9 398.7 (44.6) 6,145.3 6,521.3 1.5 6,522.8
Profit after taxation - - - 291.5 291.5 - 291.5
Other comprehensive income - - 97.2 6.4 103.6 - 103.6
Total comprehensive income - - 97.2 297.9 395.1 - 395.1
Shares (purchased)/cancelled during the financial period (0.4) - 0.4 (278.7) (278.7) - (278.7)
Dividends paid 6 - - - (140.4) (140.4) - (140.4)
Share-based payment expense - - 15.5 - 15.5 - 15.5
At 30 June 2024 - unaudited 21.5 398.7 68.5 6,024.1 6,512.8 1.5 6,514.3
Other Reserves comprise the following:
Share-
Capital Other Based Cost of
Redemption Undenominated Payment Translation Hedging Hedging
Reserve Capital Reserve Reserve Reserve Reserve Total
€'m €'m €'m €'m €'m €'m €'m
At 1 January 2023 1.7 0.3 130.3 (71.0) 4.5 (1.5) 64.3
Other comprehensive (expense)/income - - - (90.1) 1.9 0.5 (87.7)
Share-based payment expense - - 15.0 - - - 15.0
At 30 June 2023 - unaudited 1.7 0.3 145.3 (161.1) 6.4 (1.0) (8.4)
Other comprehensive expense - - - (40.4) (2.2) (0.4) (43.0)
Share-based payment expense - - 6.6 - - - 6.6
Shares cancelled during the financial period 0.2 - - - - - 0.2
At 31 December 2023 - audited 1.9 0.3 151.9 (201.5) 4.2 (1.4) (44.6)
Other comprehensive income - - - 90.9 6.0 0.3 97.2
Share-based payment expense - - 15.5 - - - 15.5
Shares cancelled during the financial period 0.4 - - - - - 0.4
At 30 June 2024 - unaudited 2.3 0.3 167.4 (110.6) 10.2 (1.1) 68.5
Condensed Consolidated Statement of Cash Flows
for the half year ended 30 June 2024
Half year Half year Year
ended ended ended
30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Audited
Notes €'m €'m €'m
Cash flows from operating activities
Profit before taxation 340.5 379.2 822.6
Adjustments for:
Depreciation (net) 113.0 109.0 219.6
Intangible asset amortisation 45.6 42.1 79.5
Share of joint ventures' results after taxation 1.0 0.7 1.9
Non-trading items income statement charge/(income) 3 24.3 (40.5) (8.8)
Finance costs (net) 4 27.8 27.5 50.3
Change in working capital (87.6) (89.7) 185.5
Pension contributions paid less pension expense (2.4) (2.7) (13.5)
Payments on non-trading items (27.2) (39.5) (99.8)
Exchange translation adjustment (4.3) (1.9) (14.2)
Cash generated from operations 430.7 384.2 1,223.1
Income taxes paid (49.5) (55.0) (119.5)
Finance income received 6.6 2.8 13.9
Finance costs paid (20.8) (22.3) (79.7)
Net cash from operating activities 367.0 309.7 1,037.8
Investing activities
Purchase of assets (103.4) (99.8) (281.9)
Proceeds from the sale of assets (net of disposal expenses) 3 - 11.5 11.6
Capital grants received - - 3.3
Purchase of businesses (net of cash acquired) 10 (78.4) (41.5) (131.1)
Payments relating to previous acquisitions (0.1) (1.3) (9.7)
Purchase of investments (1.8) (3.1) (3.0)
Disposal of businesses (net of disposal expenses) 3 (6.8) 335.5 316.4
Net cash (used in)/from investing activities (190.5) 201.3 (94.4)
Financing activities
Dividends paid 6 (140.4) (130.0) (191.3)
Purchase of own shares (278.7) - (101.7)
Payment of lease liabilities (16.8) (17.4) (36.4)
Issue of share capital 11 - - -
Repayment of borrowings (2.4) (694.0) (695.9)
Cash inflow from interest rate swaps on repayment of borrowings - 34.4 34.4
Proceeds from borrowings - 1.3 4.1
Net cash movement due to financing activities (438.3) (805.7) (986.8)
Net decrease in cash and cash equivalents (261.8) (294.7) (43.4)
Cash and cash equivalents at beginning of the period 909.0 969.8 969.8
Exchange translation adjustment on cash and cash equivalents 11.9 (14.3) (17.4)
Cash and cash equivalents at end of the period 9 659.1 660.8 909.0
Reconciliation of Net Cash Flow to Movement in Net Debt
Net decrease in cash and cash equivalents (261.8) (294.7) (43.4)
Cash flow from debt financing 2.4 658.3 657.4
Changes in net debt resulting from cash flows (259.4) 363.6 614.0
Fair value movement on interest rate swaps (net of adjustment to borrowings) 10.3 2.0 1.0
Exchange translation adjustment on net debt 6.2 (0.3) (2.3)
Movement in net debt in the period (242.9) 365.3 612.7
Net debt at beginning of the period - pre lease liabilities (1,535.5) (2,148.2) (2,148.2)
Net debt at end of the period - pre lease liabilities (1,778.4) (1,782.9) (1,535.5)
Lease liabilities (65.5) (63.6) (68.6)
Net debt at end of the period 9 (1,843.9) (1,846.5) (1,604.1)
Notes to the Condensed Consolidated Interim Financial Statements
for the half year ended 30 June 2024
1. Accounting policies
These Condensed Consolidated Interim Financial Statements for the half year
ended 30 June 2024 have been prepared in accordance with International
Financial Reporting Standards as issued by the IASB ('IFRS Accounting
Standards'), the International Financial Reporting Interpretations Committee
('IFRIC') and in accordance with IAS 34 'Interim Financial Reporting'. The
Group financial statements have also been prepared in accordance with
International Financial Reporting Standards ('IFRS') adopted by the European
Union ('EU') which comprise standards and interpretations approved by the
International Accounting Standards Board ('IASB'). The Group financial
statements comply with Article 4 of the EU IAS Regulation. IFRS adopted by the
EU differs in certain respects from IFRS Accounting Standards issued by the
IASB. References to IFRS refer to IFRS adopted by the EU. The accounting
policies applied by the Group in these Condensed Consolidated Interim
Financial Statements are the same as those detailed in the 2023 Annual Report.
In preparing the Group Condensed Consolidated Interim Financial Statements,
the significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those applied to the Consolidated Financial Statements for the year
ended 31 December 2023.
Going concern
The Group Condensed Consolidated Interim Financial Statements have been
prepared on the going concern basis of accounting. The Directors have
considered the Group's business activities and how it generates value,
together with the main trends and factors likely to affect future development,
business performance and position of the Group. Following these assessments,
the Directors have concluded there are no material uncertainties that cast a
significant doubt on the Group's ability to continue as a going concern over a
period of at least 12 months from the date of these financial statements.
The Directors report that they have satisfied themselves that the Group is a
going concern, having adequate resources to continue in operational existence
for the foreseeable future. In forming this view, the Directors have reviewed
the Group's forecast for a period not less than 12 months, the medium-term
plan and its cashflow implications have been taken into account including
proposed capital expenditure, and compared these with the Group's committed
borrowing facilities and projected gearing ratios.
The following Standards and Interpretations are effective for the Group from 1 Effective Date
January 2024 but do not have a material effect on the
results or financial position of the Group:
- IAS 1 (Amendments) Presentation of Financial Statements 1 January 2024
- IFRS 16 (Amendments) Leases 1 January 2024
- IAS 7 & IFRS 7 (Amendments) Supplier Finance Arrangements 1 January 2024
The following Standards and Interpretations are not yet effective for the Effective Date
Group and are not expected to have a material effect on the
results or financial position of the Group:
- IAS 21 (Amendments) The Effects of Changes in Foreign Exchange Rates 1 January 2025
- IFRS 7 & IFRS 9 (Amendments) Classification and Measurement of Financial Instruments 1 January 2026
- IFRS 18 Presentation and Disclosure in Financial Statements 1 January 2027
- IFRS 19 Subsidiaries without Public Accountability: Disclosures 1 January 2027
2. Analysis of results
The Group has determined it has two operating segments: Taste & Nutrition
and Dairy Ireland. The Taste & Nutrition segment is a world leading
provider of taste and nutrition solutions for the food, beverage and
pharmaceutical markets. Utilising a broad range of ingredient solutions to
innovate with our customers to create great tasting products, with improved
nutrition and functionality, while ensuring a better impact for the planet.
Kerry is driven to be our customers' most valued partner, creating a world of
sustainable nutrition through solving our customers' most complex challenges
with differentiated solutions. The Taste & Nutrition segment supplies
industries across Europe, Americas and APMEA (Asia Pacific, Middle East and
Africa). The Dairy Ireland segment is a leading Irish provider of value-add
dairy ingredients and consumer products. Our dairy ingredients product
portfolio includes functional proteins while our dairy consumer brands can be
found predominantly in chilled cabinets in retailers across Ireland and the
UK.
Half year ended 30 June 2024 - Unaudited Half year ended 30 June 2023 - Unaudited Year ended 31 December 2023 - Audited
Group Group Group
Eliminations Eliminations Eliminations
Taste & Dairy and Taste & Dairy and Taste & Dairy and
Nutrition Ireland Unallocated Total Nutrition Ireland Unallocated Total Nutrition Ireland Unallocated Total
€'m €'m €'m €'m €'m €'m €'m €'m €'m €'m €'m €'m
External revenue 3,392.2 488.2 - 3,880.4 3,521.0 600.6 - 4,121.6 6,936.7 1,083.6 - 8,020.3
Inter-segment revenue 27.0 104.1 (131.1) - 18.3 73.9 (92.2) - 38.2 199.8 (238.0) -
Revenue 3,419.2 592.3 (131.1) 3,880.4 3,539.3 674.5 (92.2) 4,121.6 6,974.9 1,283.4 (238.0) 8,020.3
EBITDA* 551.3 35.0 (34.1) 552.2 522.8 29.2 (34.0) 518.0 1,185.9 53.4 (74.2) 1,165.1
Depreciation (net) (113.0) (109.0) (219.6)
Intangible asset amortisation (45.6) (42.1) (79.5)
Non-trading items (24.3) 40.5 8.8
Operating profit 369.3 407.4 874.8
Finance income 11.4 5.7 21.8
Finance costs (39.2) (33.2) (72.1)
Share of joint ventures' results after taxation (1.0) (0.7) (1.9)
Profit before taxation 340.5 379.2 822.6
Income taxes (49.0) (21.3) (94.5)
Profit after taxation 291.5 357.9 728.1
Attributable to:
Equity holders of the parent 291.5 358.2 728.3
Non-controlling interests - (0.3) (0.2)
291.5 357.9 728.1
*EBITDA represents profit before finance income and costs, income taxes,
depreciation (net of capital grant amortisation), intangible asset
amortisation, non-trading items and share of joint ventures' results after
taxation.
Revenue analysis
Disaggregation of revenue from external customers is analysed by End Use
Market (EUM), which is the primary market in which Kerry's products are
consumed and primary geographic market. An EUM is defined as the market in
which the end consumer or customer of Kerry's product operates. The economic
factors within the EUMs of Food, Beverage and Pharma & other within the
primary geographic markets which affect the nature, amount, timing and
uncertainty of revenue and cash flows are similar.
Analysis by EUM
Half year ended 30 June 2024 - Unaudited Half year ended 30 June 2023 - Unaudited Year ended 31 December 2023 - Audited
Taste & Dairy Taste & Dairy Taste & Dairy
Nutrition Ireland Total Nutrition Ireland Total Nutrition Ireland Total
€'m €'m €'m €'m €'m €'m €'m €'m €'m
Food 2,224.7 479.8 2,704.5 2,329.2 573.3 2,902.5 4,637.3 1,051.9 5,689.2
Beverage 918.4 8.4 926.8 928.9 27.3 956.2 1,798.6 31.7 1,830.3
Pharma & other 249.1 - 249.1 262.9 - 262.9 500.8 - 500.8
External revenue 3,392.2 488.2 3,880.4 3,521.0 600.6 4,121.6 6,936.7 1,083.6 8,020.3
Analysis by primary geographic market
Disaggregation of revenue from external customers is analysed by geographical
split:
Half year ended 30 June 2024 - Unaudited Half year ended 30 June 2023 - Unaudited Year ended 31 December 2023 - Audited
Taste & Dairy Taste & Dairy Taste & Dairy
Nutrition Ireland Total Nutrition Ireland Total Nutrition Ireland Total
€'m €'m €'m €'m €'m €'m €'m €'m €'m
Republic of Ireland 34.8 176.0 210.8 56.9 233.3 290.2 134.7 405.3 540.0
Rest of Europe 673.4 278.6 952.0 714.5 322.4 1,036.9 1,382.5 600.3 1,982.8
Americas 1,890.2 13.8 1,904.0 1,936.4 17.7 1,954.1 3,772.5 32.5 3,805.0
APMEA 793.8 19.8 813.6 813.2 27.2 840.4 1,647.0 45.5 1,692.5
External revenue 3,392.2 488.2 3,880.4 3,521.0 600.6 4,121.6 6,936.7 1,083.6 8,020.3
The accounting policies of the operating segments are the same as those
detailed in the Statement of accounting policies in the 2023 Annual Report.
Under IFRS 15 'Revenue from Contracts with Customers' revenue is primarily
recognised at a point in time. Revenue recorded over time during the period
was not material to the Group.
3. Non-trading items
Half year Half year Year
ended ended ended
30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Audited
Notes €'m €'m €'m
Global Business Services expansion (ii) - (2.8) (4.1)
Acquisition integration costs (iii) (2.9) (1.1) (16.5)
Accelerate Operational Excellence (iv) (22.3) (25.1) (53.5)
(25.2) (29.0) (74.1)
Profit/(loss) on disposal of businesses and assets (i) 0.9 69.5 82.9
Tax on above 4.1 24.5 8.6
Non-trading items (net of related tax) (20.2) 65.0 17.4
(i) Profit/(loss) on disposal of businesses and assets
The Group disposed of property, plant and equipment primarily in North America
and Europe for a consideration of €2.2m resulting in a profit of €0.9m
during the period ended 30 June 2024. A tax charge of €0.4m arose on the
disposal of assets for the period.
In the period ended 30 June 2023 the Group disposed of property, plant and
equipment primarily in North America and Europe for a consideration of
€11.5m resulting in a profit of €6.0m. This profit on disposal of
property, plant and equipment was offset by the further impairment of certain
assets classified as held for sale based in North America to their fair value
less costs to sell by €15.0m, consisting of property, plant and equipment of
€10.5m and €4.5m of estimated costs to sell. A tax credit of €1.5m arose
on the disposal of assets for the period.
In the year ended 31 December 2023 the Group disposed of property, plant and
equipment primarily in North America and Europe for a consideration of
€13.9m resulting in a profit of €2.6m. This profit on disposal of
property, plant and equipment was offset by an impairment charge of €15.3m
in North America and a €13.5m charge with respect to related disposal costs.
In addition to these charges, a number of additional assets were disposed
across the Group and a €3.9m loss on disposal was recognised. A tax credit
of €6.0m arose on the disposal of assets for the period.
In 2023 the Group completed the sale of the trade and assets of its Sweet
Ingredients Portfolio and also disposed of small operations in South Africa
and South Korea for a combined final consideration of €481.8m resulting in a
gain of €113.0m for the year ended 31 December 2023 (30 June 2023: €78.5m
gain), with the related tax charge of €9.8m. The profit on disposal of these
businesses includes the associated costs in relation to these divestments.
(ii) Global Business Services expansion
In 2020, the Group commenced a programme to evolve, migrate and expand its
Global Business Services model to better enable the business and support
further growth. This phase of the programme completed at the end of 2023 and
the Group has incurred no costs in the period ended 30 June 2024 (30 June
2023: €2.8m; 31 December 2023: €4.1m). The costs in the prior year
reflected relocation of resources, advisory fees, redundancies and the
streamlining of operations. The associated tax credit was €nil (30 June
2023: €0.3m; 31 December 2023: €0.5m).
(iii) Acquisition integration costs
These costs of €2.9m (30 June 2023: €1.1m; 31 December 2023: €16.5m)
reflect the restructuring of operations in order to integrate the acquired
businesses into the existing Kerry operating model and external costs
associated with deal preparation, integration planning and due diligence. A
tax credit of €0.4m (30 June 2023: €0.1m; 31 December 2023: €2.8m) arose
due to tax deductions available on acquisition related costs.
(iv) Accelerate Operational Excellence
These costs of €22.3m (30 June 2023: €25.1m; 31 December 2023: €53.5m)
predominantly reflect consultancy fees, project management costs and costs of
streamlining operations incurred in the period relating to our Accelerate
Operational Excellence Transformation Programme, which will run until the end
of 2024. This material transformation project deploying next generation
manufacturing processes, including advanced process controls, is combined with
building capabilities within the Group to enhance continuous improvement in
manufacturing processes which will deliver step change manufacturing
excellence across the organisation. This project is also focused on supply
chain excellence, optimising the Group's warehousing and distribution network.
A tax credit of €4.1m (30 June 2023: €5.8m; 31 December 2023: €9.1m)
arose due to tax deductions available on accelerate operational excellence
costs.
4. Finance income and costs
Half year Half year Year
ended ended ended
30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Audited
€'m €'m €'m
Finance income:
Interest income on deposits 6.4 3.4 14.5
Interest income on vendor loan note 5.0 2.3 7.3
Finance income 11.4 5.7 21.8
Finance costs:
Interest payable and finance charges (37.7) (34.1) (72.8)
Interest on lease liabilities (1.5) (0.9) (2.6)
Interest rate derivative (0.7) 0.2 0.2
(39.9) (34.8) (75.2)
Net interest income on retirement benefits obligation 0.7 1.6 3.1
Finance costs (39.2) (33.2) (72.1)
Net finance costs (27.8) (27.5) (50.3)
5. Earnings per A ordinary share
Half year Half year Year
ended ended ended
30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Audited
EPS EPS EPS
cent €'m cent €'m cent €'m
Basic earnings per share
Profit after taxation attributable to equity holders of the parent 166.7 291.5 201.7 358.2 410.4 728.3
Diluted earnings per share
Profit after taxation attributable to equity holders of the parent 166.5 291.5 201.5 358.2 409.7 728.3
30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Audited
Number of Shares m's m's m's
Basic weighted average number of shares 174.8 177.6 177.4
Impact of share options outstanding 0.3 0.2 0.3
Diluted weighted average number of shares 175.1 177.8 177.7
6. Dividends
Half year Half year Year
ended ended ended
30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Audited
€'m €'m €'m
Amounts recognised as distributions to equity shareholders in the period
Final 2023 dividend of 80.80 cent per A ordinary share paid 10 May 2024 140.4 130.0 130.0
(Final 2022 dividend of 73.40 cent per A ordinary share paid 12 May 2023)
Interim 2023 dividend of 34.60 cent per A ordinary share paid 10 November 2023 - - 61.3
140.4 130.0 191.3
Since the end of the period, the Board has declared an interim dividend of
38.1 cent per A ordinary share which amounts to €65.7m based on ordinary
shares in issue at 30 June 2024. The payment date for the interim dividend
will be 8 November 2024 to shareholders registered on the record date as at 11
October 2024. The Condensed Consolidated Interim Financial Statements do not
reflect this dividend.
7. Other non-current financial instruments
Half year Half year Year
ended ended ended
30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Audited
€'m €'m €'m
Vendor loan note 128.0 125.0 124.3
Forward foreign exchange contracts 0.1 0.7 0.7
Interest rate swaps 10.2 - -
Total other non-current financial instruments 138.3 125.7 125.0
As of 30 June 2024, the Group holds an interest bearing vendor loan note which
was entered into as part of the consideration for the sale of the trade and
assets of the Sweet Ingredients Portfolio from the Taste & Nutrition
segment (note 3). The carrying amount of the debt receivable is €128.0m,
this represents the amount due from third parties, and is initially recognised
at fair value of €125.0m and interest capitalised on a bi-annual basis. As
the Group objective for the vendor loan note is to collect the contractual
cash flows when due, the Group measures at amortised cost using the effective
interest method subsequent to initial recognition adjusted for any expected
credit loss assessment.
8. Retirement benefits obligation
The net surplus/(deficit) recognised in the Condensed Consolidated Balance
Sheet for the Group's defined benefit post-retirement schemes was as follows:
Schemes Schemes
in Surplus in Deficit Total
Half year Half year Half year
ended ended ended
30 June 2024 30 June 2024 30 June 2024
Unaudited Unaudited Unaudited
€'m €'m €'m
Net recognised surplus/(deficit) before deferred tax 100.3 (40.4) 59.9
Net related deferred tax (liability)/asset (12.5) 9.9 (2.6)
Net recognised surplus/(deficit) after deferred tax 87.8 (30.5) 57.3
At 30 June 2024, the net surplus before deferred tax for defined benefit
post-retirement schemes was €59.9m (30 June 2023: €43.1m; 31 December
2023: €48.3m). This was calculated by rolling forward the defined benefit
post-retirement schemes' liabilities at 31 December 2023 to reflect material
movements in underlying assumptions over the period while the defined benefit
post-retirement schemes' assets at 30 June 2024 are measured at market value.
The increase in the net surplus before deferred tax of €11.6m was driven by
favourable movements in financial assumptions which were partially offset by
lower asset values.
The surplus at 30 June 2024, 31 December 2023 and 30 June 2023 relates to the
Irish scheme. The surplus has been recognised in accordance with IFRIC 14 'The
Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction' as it has been determined that the Group has an unconditional
right to a refund of the surplus.
Schemes Schemes
in Surplus in Deficit Total
Half year Half year Half year
ended ended ended
30 June 2023 30 June 2023 30 June 2023
Unaudited Unaudited Unaudited
€'m €'m €'m
Net recognised surplus/(deficit) before deferred tax 96.2 (53.1) 43.1
Net related deferred tax (liability)/asset (12.0) 13.0 1.0
Net recognised surplus/(deficit) after deferred tax 84.2 (40.1) 44.1
Schemes Schemes
in Surplus in Deficit Total
year ended year ended year ended
31 Dec. 2023 31 Dec. 2023 31 Dec. 2023
Audited Audited Audited
€'m €'m €'m
Net recognised surplus/(deficit) before deferred tax 98.0 (49.7) 48.3
Net related deferred tax (liability)/asset (12.3) 12.2 (0.1)
Net recognised surplus/(deficit) after deferred tax 85.7 (37.5) 48.2
9. Financial instruments
i) The following table outlines the financial assets and liabilities in
relation to net debt held by the Group at the Balance Sheet date:
Assets/(Liabilities) Derivatives
Financial at Fair Value Designated as Assets/
Assets/(Liabilities) through Profit Hedging (Liabilities) at
at Amortised Cost or Loss Instruments FVOCI Total
€'m €'m €'m €'m €'m
Assets:
Interest rate swaps - - 10.2 - 10.2
Cash at bank and in hand 659.5 - - - 659.5
659.5 - 10.2 - 669.7
Liabilities:
Interest rate swaps - - (13.6) - (13.6)
Bank overdrafts (0.4) - - - (0.4)
Bank loans 2.3 - - - 2.3
Senior Notes (2,441.8) 5.4 - - (2,436.4)
Borrowings and overdrafts (2,439.9) 5.4 - - (2,434.5)
Net debt - pre lease liabilities (1,780.4) 5.4 (3.4) - (1,778.4)
Lease liabilities (65.5) - - - (65.5)
Net debt at 30 June 2024 - unaudited (1,845.9) 5.4 (3.4) - (1,843.9)
Assets:
Interest rate swaps - - - - -
Cash at bank and in hand 660.8 - - - 660.8
660.8 - - - 660.8
Liabilities:
Interest rate swaps - - (15.9) - (15.9)
Bank overdrafts - - - - -
Bank loans 1.5 - - - 1.5
Senior Notes (2,441.8) 12.5 - - (2,429.3)
Borrowings and overdrafts (2,440.3) 12.5 - - (2,427.8)
Net debt - pre lease liabilities (1,779.5) 12.5 (15.9) - (1,782.9)
Lease liabilities (63.6) - - - (63.6)
Net debt at 30 June 2023 - unaudited (1,843.1) 12.5 (15.9) - (1,846.5)
Assets:
Interest rate swaps - - - - -
Cash at bank and in hand 943.7 - - - 943.7
943.7 - - - 943.7
Liabilities:
Interest rate swaps - - (9.5) - (9.5)
Bank overdrafts (34.7) - - - (34.7)
Bank loans 0.2 - - - 0.2
Senior Notes (2,441.8) 6.6 - - (2,435.2)
Borrowings and overdrafts (2,476.3) 6.6 - - (2,469.7)
Net debt - pre lease liabilities (1,532.6) 6.6 (9.5) - (1,535.5)
Lease liabilities (68.6) - - - (68.6)
Net debt at 31 December 2023 - audited (1,601.2) 6.6 (9.5) - (1,604.1)
All Group borrowings and overdrafts and interest rate swaps are guaranteed by
Kerry Group plc. No assets of the Group have been pledged to secure these
items.
In May 2024 the Group exercised the first of two "plus one" extension options
on its €1,500m revolving credit facility to extend the maturity date of this
facility to June 2029.
As at 30 June 2024, the Group's debt portfolio included:
- €750m of Senior Notes issued in 2015 and €200m issued in April 2020 as a
tap onto the original issuance (the 2025 Senior Notes). €175m of the
issuance in 2015 were swapped, using cross currency swaps, to US dollar;
- €750m of Senior Notes issued in 2019 (the 2029 Senior Notes). No interest
rate derivatives were entered into for this issuance;
- €750m of sustainability-linked bond notes issued in 2021 (the 2031 SLB
Senior Notes). No interest rate derivatives were entered into for this
issuance;
- €375m of a forward starting interest rate swap, with a trade date of
December 2023. Effective from H1 2025, the Group will pay an annual fixed rate
of 2.43% and receive 6 month EURIBOR up until the termination date in H1 2035.
The swap is accounted for as a cashflow hedge of a highly probable future debt
issuance replacing the 2025 Senior Notes.
The adjustment to Senior Notes classified under liabilities at fair value
through profit or loss of €5.4m (30 June 2023: €12.5m; 31 December 2023:
€6.6m) represents the part adjustment to the carrying value of debt from
applying fair value hedge accounting for interest rate risk. This amount is
primarily offset by the fair value adjustment on the corresponding hedge items
being the underlying cross currency interest rate swaps.
ii) The Group's exposure to interest rates on financial assets and liabilities
are detailed in the table below including the impact of cross currency swaps
('CCS') on the currency profile of net debt:
Total Pre CCS Impact of CCS Total after CCS Half year Year
Half year ended Half year ended Half year ended ended ended
30 June 2024 30 June 2024 30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Unaudited Unaudited Audited
€'m €'m €'m €'m €'m
Euro (2,338.6) 175.0 (2,163.6) (2,103.1) (2,039.0)
Sterling 88.6 - 88.6 88.5 93.0
US Dollar 269.8 (175.0) 94.8 20.5 139.3
Other 134.3 - 134.3 151.0 205.5
(1,845.9) - (1,845.9) (1,843.1) (1,601.2)
iii) The following table details the maturity profile of the Group's net debt:
On demand & Up to 2 - 5
up to 1 year 2 years years > 5 years Total
€'m €'m €'m €'m €'m
Cash at bank and in hand 659.5 - - - 659.5
Interest rate swaps - (13.6) - 10.2 (3.4)
Bank overdrafts (0.4) - - - (0.4)
Bank loans - - 2.3 - 2.3
Senior Notes - (946.7) - (1,489.7) (2,436.4)
Net debt - pre lease liabilities 659.1 (960.3) 2.3 (1,479.5) (1,778.4)
Lease liabilities (discounted) (25.1) (18.9) (14.9) (6.6) (65.5)
At 30 June 2024 - unaudited 634.0 (979.2) (12.6) (1,486.1) (1,843.9)
Cash at bank and in hand 660.8 - - - 660.8
Interest rate swaps - - (15.9) - (15.9)
Bank overdrafts - - - - -
Bank loans (1.3) - 2.8 - 1.5
Senior Notes - - (941.3) (1,488.0) (2,429.3)
Net debt - pre lease liabilities 659.5 - (954.4) (1,488.0) (1,782.9)
Lease liabilities (discounted) (31.8) (11.8) (13.0) (7.0) (63.6)
At 30 June 2023 - unaudited 627.7 (11.8) (967.4) (1,495.0) (1,846.5)
Cash at bank and in hand 943.7 - - - 943.7
Interest rate swaps - (9.4) - (0.1) (9.5)
Bank overdrafts (37.1) - - - (37.1)
Bank loans - - 2.6 - 2.6
Senior Notes - (946.3) - (1,488.9) (2,435.2)
Net debt - pre lease liabilities 906.6 (955.7) 2.6 (1,489.0) (1,535.5)
Lease liabilities (discounted) (26.2) (16.9) (18.2) (7.3) (68.6)
At 31 December 2023 - audited 880.4 (972.6) (15.6) (1,496.3) (1,604.1)
At 30 June 2024, the Group had cash on hand of €659.5m. At the period end,
the Group had an undrawn committed Syndicate revolving credit facility of
€1,500m. Cash at bank and in hand includes an amount of €56.1m held on
short-term deposit.
iv) Fair value of financial instruments:
a) Fair value of financial instruments carried at fair value
The following table sets out the fair value of financial instruments carried
at fair value:
Fair Value 30 June 2024 30 June 2023 31 Dec. 2023
Hierarchy Unaudited Unaudited Audited
€'m €'m €'m
Financial assets
Interest rate swaps: Non-current Level 2 10.2 - -
Current Level 2 - - -
Forward foreign exchange contracts: Non-current Level 2 0.1 0.7 0.7
Current Level 2 5.3 19.3 13.7
Financial asset investments: Fair value through profit or loss Level 1 38.2 42.8 39.9
Fair value through other comprehensive income Level 3 14.2 12.1 12.1
Financial liabilities
Interest rate swaps: Non-current Level 2 (13.6) (15.9) (9.5)
Current Level 2 - - -
Forward foreign exchange contracts: Non-current Level 2 - (0.2) (0.2)
Current Level 2 (8.8) (8.5) (7.5)
Deferred payments on acquisition of businesses: Non-current Level 3 (15.3) (4.2) (98.6)
Current Level 3 (75.0) (28.4) (2.1)
There have been no transfers between levels during the current or prior
financial period.
Financial instruments recognised at fair value are analysed between those
based on:
- quoted prices in active markets for identical assets or liabilities (Level 1);
- those involving inputs other than quoted prices included in Level 1 that are
observable for the assets or liabilities, either directly (as prices) or
indirectly (derived from prices) (Level 2); and
- those involving inputs for the assets or liabilities that are not based on
observable market data (unobservable inputs) (Level 3).
b) Fair value of financial instruments carried at amortised cost
Except as defined in the following table, it is considered that the carrying
amounts of financial assets and financial liabilities recognised at amortised
cost in the Condensed Consolidated Interim Financial Statements approximate
their fair values.
Carrying Fair Carrying Fair Carrying Fair
Amount Value Amount Value Amount Value
Fair Value 30 June 2024 30 June 2024 30 June 2023 30 June 2023 31 Dec. 2023 31 Dec. 2023
Hierarchy Unaudited Unaudited Unaudited Unaudited Audited Audited
€'m €'m €'m €'m €'m €'m
Financial liabilities
Senior Notes - Public Level 2 (2,441.8) (2,185.2) (2,441.8) (2,104.9) (2,441.8) (2,204.5)
c) Valuation principles
The fair value of financial assets and liabilities are determined as follows:
- assets and liabilities with standard terms and conditions which are traded on
active liquid markets are determined with reference to quoted market prices.
This includes equity investments;
- other financial assets and liabilities (excluding derivatives) are determined
in accordance with generally accepted pricing models based on discounted cash
flow analysis using prices from observable current market transactions and
dealer quotes for similar instruments. This includes interest rate swaps and
forward foreign exchange contracts which are determined by discounting the
estimated future cash flows;
- the fair values of financial instruments that are not based on observable
market data (unobservable inputs) requires entity specific valuation
techniques; and
- derivative financial instruments are calculated using quoted prices. Where
such prices are not available, a discounted cash flow analysis is performed
using the applicable yield curve for the duration of the instruments. Forward
foreign exchange contracts are measured using quoted forward exchange rates
and yield curves derived from quoted interest rates adjusted for counterparty
credit risk, which is calculated based on credit default swaps of the
respective counterparties. Interest rate swaps are measured at the present
value of future cash flows estimated and discounted based on the applicable
yield curves derived from quoted interest rates adjusted for counterparty
credit risk, which is calculated based on credit default swaps of the
respective counterparties.
Net debt reconciliation
Cash at Interest Overdrafts Borrowings Borrowings Net Debt
bank and Rate due within due within due after - pre lease Lease Net
in hand Swaps 1 year* 1 year* 1 year* liabilities liabilities* Debt
€'m €'m €'m €'m €'m €'m €'m €'m
At 31 December 2022 - audited 970.0 15.5 (0.2) (700.9) (2,432.6) (2,148.2) (69.2) (2,217.4)
Cash flows (294.9) (34.5) 0.2 688.3 4.5 363.6 17.4 381.0
Foreign exchange adjustments (14.3) 1.4 - 12.9 (0.3) (0.3) 1.3 1.0
Other non-cash movements - 1.7 - (1.6) 1.9 2.0 (13.1) (11.1)
At 30 June 2023 - unaudited 660.8 (15.9) - (1.3) (2,426.5) (1,782.9) (63.6) (1,846.5)
Cash flows 286.0 0.1 (34.7) (1.0) - 250.4 19.0 269.4
Foreign exchange adjustments (3.1) 1.1 - - - (2.0) - (2.0)
Other non-cash movements - 5.2 - (0.1) (6.1) (1.0) (24.0) (25.0)
At 31 December 2023 - audited 943.7 (9.5) (34.7) (2.4) (2,432.6) (1,535.5) (68.6) (1,604.1)
Cash flows (296.1) - 34.3 2.4 - (259.4) 16.8 (242.6)
Foreign exchange adjustments 11.9 (5.7) - - - 6.2 (0.6) 5.6
Other non-cash movements - 11.8 - - (1.5) 10.3 (13.1) (2.8)
At 30 June 2024 - unaudited 659.5 (3.4) (0.4) - (2,434.1) (1,778.4) (65.5) (1,843.9)
*Liabilities from financing activities.
10. Business combinations
The following acquisition was completed by the Group during the period to 30
June 2024:
Acquisition Type Completion date Percentage acquired Segment Principal activity Strategic rationale
Part of the global lactase enzymes business of Novonesis (formerly Chr. Hansen Asset April 2024 Certain trade and assets of Chr.Hansen's global lactase enzyme business on a Taste & The Lactase Enzymes Business which includes NOLA(®) Products, further This acquisition adds enzyme technology which helps create lactose-free and
Holding A/S ("Chr. Hansen") and Novozymes A/S ("Novozymes")).
carve-out basis and 100% of the share capital of Nuocheng Trillion Food
enhances Kerry's biotechnology solutions capability. sugar reduced dairy products, while preserving their authentic clean taste.
& (Tianjin) Co., Ltd., a Chinese subsidiary of Novozymes. Nutrition Global demand for lactase is being driven by increased awareness of lactose
intolerance, while many consumers are also choosing lactose-free for lifestyle
Equity and health reasons.
The table below provides details of the identifiable net assets, including
adjustments to provisional fair values, in respect of the acquisition
completed during the period to 30 June 2024:
Half year
ended
30 June 2024
Unaudited
€'m
Recognised amounts of identifiable assets acquired and liabilities assumed:
Non-current assets
Property, plant and equipment 51.6
Brand related intangibles 81.7
Current assets
Cash at bank and in hand 0.8
Inventories 6.1
Trade and other receivables 1.5
Current liabilities
Trade and other payables (2.7)
Total identifiable assets 139.0
Goodwill 6.0
Total consideration 145.0
Satisfied by:
Cash 79.2
Deferred consideration* 65.8
145.0
*The deferred consideration consists of two additional payments totalling
€65.8m (DKK 491.5m) payable in the second half of 2024 based on contractual
arrangements. The €65.8m represents the fair value of the expected deferred
consideration. Since the period end one payment of €25.4m (DKK 189.6m) has
been paid for the acquisition with the second payment payable in Q4 2024.
Net cash outflow on acquisition:
Half year
ended
30 June 2024
Unaudited
€'m
Cash 79.2
Less: cash and cash equivalents acquired (0.8)
78.4
The acquisition method of accounting has been used to consolidate the business
acquired in the Group's Condensed Consolidated Interim Financial Statements.
Given that the valuation of the fair value of assets and liabilities recently
acquired is still in progress, some of the values in the previous table are
determined provisionally. For the acquisitions completed in 2023, there have
been material revisions of the provisional fair value adjustments since the
initial values were established as outlined in the table below. The Group
performs quantitative and qualitative assessments of each acquisition in order
to determine whether it is material for the purposes of separate disclosure
under IFRS 3 'Business Combinations'. The acquisition completed during the
period was not considered material to warrant separate disclosure under these
assessments.
The goodwill is attributable to the expected profitability, revenue growth,
future market development and assembled workforce of the acquired business and
the synergies expected to arise within the Group after the acquisition. The
goodwill recognised is expected to be deductible for income tax purposes.
Transaction expenses related to this acquisition of €1.8m were charged in
the Group's Condensed Consolidated Income Statement during the financial
period. The fair value of the financial assets includes trade and other
receivables with a fair value of €1.4m and a gross contractual value of
€1.5m.
The revenue and profit after taxation attributable to owners of the parent to
the Group contributed from date of acquisition for all business combinations
effected during the period is as follows:
Half year
ended
30 June 2024
Unaudited
€'m
Revenue 9.3
Profit after taxation attributable to equity holders of the parent 1.1
The revenue and profit after taxation attributable to equity holders of the
parent to the Group determined in accordance with IFRS as though the
acquisition date for all business combinations effected during the period had
been the beginning of that period would be as follows:
Kerry Group Consolidated
excluding Group
2024 2024 including
acquisition acquisition acquisition
Unaudited Unaudited Unaudited
€'m €'m €'m
Revenue 28.0 3,871.1 3,899.1
Profit after taxation attributable to equity holders of the parent 3.3 290.4 293.7
2023 Acquisitions
During 2023, the Group completed a total of two acquisitions both of which are
100% owned by the Group. The initial assessment of fair values to identifiable
net assets acquired was performed on a provisional basis. As part of the
finalisation of the expected contingent consideration and the fair value
exercise in respect of the 2023 acquisitions, the Group considered the
valuations applied to intangible and tangible assets acquired. The outcome of
this exercise resulted in a reduction of goodwill arising on acquisition by
€67.0m and a reduction in contingent consideration of €75.1m. The
amendments to these fair values were made to the comparative figures during
the subsequent reporting window within the measurement period imposed by IFRS
3 'Business Combinations'. The provisional fair value of these assets
recorded, together with the adjustments made to those carrying values to
arrive at the final fair values were as follows:
Provisional fair Measurement
values of 2023 period
acquisitions adjustments Total
2023 2023 2023
€'m €'m €'m
Property, plant and equipment 9.7 - 9.7
Goodwill arising on acquisition 176.9 (67.0) 109.9
Other brand-related intangibles 41.6 (9.5) 32.1
Non-current assets 228.2 (76.5) 151.7
Current assets 14.2 - 14.2
Non-current liabilities (13.5) 1.4 (12.1)
Current liabilities (18.8) - (18.8)
Total identifiable assets 210.1 (75.1) 135.0
Total consideration 210.1 (75.1) 135.0
11. Share capital
Half year Half year Year
ended ended ended
30 June 2024 30 June 2023 31 Dec. 2023
Unaudited Unaudited Audited
€'m €'m €'m
Authorised
280,000,000 A ordinary shares of 12.50 cent each 35.0 35.0 35.0
Allotted, called-up and fully paid (A ordinary shares of 12.50 cent each)
At beginning of the financial period 21.9 22.1 22.1
Shares issued during the financial period - - -
Shares cancelled during the financial period (0.4) - (0.2)
At end of the financial period 21.5 22.1 21.9
Kerry Group plc has one class of ordinary share which carries no right to
fixed income.
Shares issued during the period
During the period a total of 181,929 A ordinary shares, each with a nominal
value of 12.50 cent, were issued at nominal value per share under the
Long-Term and Short-Term Incentive Plans.
The total number of shares in issue at 30 June 2024 was 172,457,816 (30 June
2023: 177,098,561; 31 December 2023: 175,792,661).
Share Buyback Programme
In May 2024, the Board approved a new Share Buyback Programme of up to €300
million. The Share Buyback Programme is underpinned by the Group's strong
balance sheet and cash flow and is aligned to Kerry's Capital Allocation
Framework. The programme commenced on 7 May 2024 and will end no later than 19
December 2024. In the period from 7 May 2024 to 30 June 2024 the Company
purchased 1,035,583 shares at a total cost of €80.1m. At 30 June 2024 there
was no financial liability recorded in relation to the Share Buyback
Programme. Since the period end, and up to 26 July 2024, the Company has
announced the purchase of an additional 1,109,438 shares at a total cost of
€86.6m.
The previous Share Buyback Programme announced in October 2023, commenced on 1
November 2023 and was completed by 30 April 2024. The total number of shares
acquired during 2023 was 1,373,261 at a cost of €101.7m. During the period 1
January 2024 to 30 April 2024, an additional 2,481,191 shares were acquired at
a cost of €198.6m, resulting in a total number of shares acquired as part of
this programme of 3,854,452 at a total cost of €300.3m including transaction
costs of €0.3m. All shares acquired were A ordinary shares with a nominal
value of 12.50 cent. The shares acquired were cancelled immediately following
their repurchase.
12. Events after the Balance Sheet date
Since the period end, the Group has:
- declared an interim dividend of 38.1 cent per A ordinary share (see note 6);
and
- the Company announced the repurchase of 1,109,438 shares at a cost of €86.6m
up to 26 July 2024.
There have been no other significant events, outside of the ordinary course of
business, affecting the Group since 30 June 2024.
13. General information
These unaudited Condensed Consolidated Interim Financial Statements for the
half year ended 30 June 2024 are not full financial statements and were not
reviewed or audited by the Group's auditors, PricewaterhouseCoopers (PwC).
These Condensed Consolidated Interim Financial Statements were approved by the
Board of Directors and authorised for issue on 30 July 2024. The figures
disclosed relating to 31 December 2023 have been derived from the Consolidated
Financial Statements which were audited, received an unqualified audit report
and have been filed with the Registrar of Companies. This report should be
read in conjunction with the 2023 Annual Report which was prepared in
accordance with IFRS adopted by the European Union ('EU') which comprise
standards and interpretations approved by the International Accounting
Standards Board ('IASB'). The Group financial statements comply with Article 4
of the EU IAS Regulation. IFRS adopted by the EU differs in certain respects
from IFRS Accounting Standards issued by the IASB. References to IFRS refer to
IFRS adopted by the EU. The accounting policies applied by the Group in these
Condensed Consolidated Interim Financial Statements are the same as those
detailed in the 2023 Annual Report.
These unaudited Condensed Consolidated Interim Financial Statements have been
prepared on the going concern basis of accounting as set out in Note 1. The
Directors report that they have satisfied themselves that the Group is a going
concern, having adequate resources to continue in operational existence for
the foreseeable future. In forming this view, the Directors have reviewed the
Group's budget for a period not less than 12 months, the five year medium-term
plan and have taken into account the cash flow implications of the plans,
including proposed capital expenditure, and compared these with the Group's
committed borrowing facilities and projected gearing ratios.
Intangible assets increased by €109.6m to €5,859.4m (31 December 2023:
€5,749.8m; 30 June 2023: €5,686.5m) due to business acquisitions, computer
software additions and the positive impact of foreign exchange translation,
offset by the measurement period adjustments relating to previous years
acquisition (Note 10) and the amortisation charge for the period.
In relation to seasonality, EBITDA is lower in the first half of the year due
to the nature of the food business and stronger trading in the second half.
While revenue is relatively evenly spread, margin has traditionally been
higher in the second half of the year due to product mix and the timing of
promotional activity. There is also a material change to the levels of working
capital between December and June mainly due to the seasonal nature of the
dairy and crop-based businesses.
As permitted by the Transparency (Directive 2004/109/EC) Regulations 2007 this
Interim Report is available on www.kerry.com. However, if a physical copy is
required, please contact the Corporate Affairs department.
FINANCIAL DEFINITIONS
1. Revenue
Volume growth
This represents the sales growth period-on-period, excluding pass-through
pricing on input costs, currency impacts, acquisitions, disposals and
rationalisation volumes.
Volume growth is an important metric as it is seen as the key driver of
organic top-line business improvement. Pricing impacts revenue growth
positively or negatively depending on whether inputs move up or down. A full
reconciliation to reported revenue performance is detailed in the revenue
reconciliation below.
Revenue Reconciliation
Volume Transaction Translation Reported
H1 2024 performance Price currency Acquisitions Disposals currency performance
Taste & Nutrition 3.1% (3.0%) - 0.7% (3.1%) (1.1%) (3.4%)
Dairy Ireland (1.9%) (6.9%) - - (3.8%)* 0.4% (12.2%)
Group 1.7% (4.0%) - 0.6% (3.3%) (0.9%) (5.9%)
H1 2023
Taste & Nutrition 1.4% 5.4% - 1.3% (5.3%) (0.1%) 2.7%
Dairy Ireland (2.5%) 0.4% (0.1%) - - (0.8%) (3.0%)
Group 0.6% 4.5% - 1.1% (4.5%) (0.1%) 1.6%
*Reduction in revenue reflects changes in contractual arrangements implemented
in the current year, where Dairy Ireland has become an agent, in accordance
with IFRS 15 'Revenue form Contracts with Customers'. The related revenue in
H1 2024 amounted to €1m (H1 2023: €26m).
2. EBITDA
EBITDA represents profit before finance income and costs, income taxes,
depreciation (net of capital grant amortisation), intangible asset
amortisation, non-trading items and share of joint ventures' results after
taxation. EBITDA is reflective of underlying trading performance and allows
comparison of the trading performance of the Group's businesses, either
period-on-period or with other businesses.
H1 2024 H1 2023
€'m €'m
Profit after taxation 291.5 357.9
Share of joint ventures' results after taxation 1.0 0.7
Finance income (11.4) (5.7)
Finance costs 39.2 33.2
Income taxes 49.0 21.3
Non-trading items 24.3 (40.5)
Intangible asset amortisation 45.6 42.1
Depreciation (net) 113.0 109.0
EBITDA 552.2 518.0
3. EBITDA Margin
EBITDA margin represents EBITDA expressed as a percentage of revenue.
H1 2024 H1 2023
€'m €'m
EBITDA 552.2 518.0
Revenue 3,880.4 4,121.6
EBITDA margin 14.2% 12.6%
4. Operating Profit
Operating profit is profit before income taxes, finance income, finance costs
and share of joint ventures' results after taxation.
H1 2024 H1 2023
€'m €'m
Profit before taxation 340.5 379.2
Finance income (11.4) (5.7)
Finance costs 39.2 33.2
Share of joint ventures' results after taxation 1.0 0.7
Operating profit 369.3 407.4
5. Adjusted Earnings Per Share and Performance in Adjusted Earnings Per Share
on a Constant Currency Basis
The performance in adjusted earnings per share on a constant currency basis is
provided as it is considered more reflective of the Group's underlying trading
performance. Adjusted earnings is profit after taxation attributable to equity
holders of the parent before brand related intangible asset amortisation and
non-trading items (net of related tax). These items are excluded in order to
assist in the understanding of underlying earnings. A full reconciliation of
adjusted earnings per share to basic earnings per share is provided below.
Constant currency eliminates the translational effect that arises from changes
in foreign currency period-on-period. The performance in adjusted earnings per
share on a constant currency basis is calculated by comparing current period
adjusted earnings per share to the prior period adjusted earnings per share
retranslated at current period average exchange rates.
H1 2024 H1 2023
EPS Performance EPS Performance
cent % cent %
Basic earnings per share 166.7 (17.4%) 201.7 57.1%
Brand related intangible asset amortisation 15.8 - 14.9 -
Non-trading items (net of related tax) 11.6 - (36.6) -
Adjusted earnings per share 194.1 7.8% 180.0 2.0%
Impact of retranslating prior period adjusted earnings per share at current 1.3% 0.1%
period average exchange rates*
Growth in adjusted earnings per share on a constant currency basis 9.1% 2.1%
*Impact of H1 2024 translation was 2.3/180 cent = 1.3% (H1 2023: 0.1%).
6. Free Cash Flow
Free cash flow is EBITDA plus movement in average working capital, capital
expenditure net (purchase of assets, payment of lease liabilities, proceeds
from the sale of assets (net of disposal expenses) and capital grants
received), pensions contributions paid less pension expense, finance costs
paid (net) and income taxes paid.
Free cash flow is seen as an important indicator of the strength and quality
of the business and of the availability to the Group of funds for reinvestment
or for return to shareholders. Movement in average working capital is used
when calculating free cash flow as management believes this provides a more
accurate measure of the increase or decrease in working capital needed to
support the business over the course of the period rather than at two distinct
points in time and more accurately reflects fluctuations caused by seasonality
and other timing factors. Average working capital is the sum of each month's
working capital over 6 months adjusted for the impact of acquisitions and
disposals. Below is a reconciliation of free cash flow to the nearest IFRS
measure, which is 'Net cash from operating activities'.
H1 2024 H1 2023
€'m €'m
Net cash from operating activities 367.0 309.7
Difference between movement in monthly average working capital and movement in 167.1 (13.5)
the period end working capital
Payments on non-trading items 27.2 39.5
Purchase of assets (103.4) (99.8)
Payment of lease liabilities (16.8) (17.4)
Proceeds from the sale of assets (net of disposal expenses) - 11.5
Exchange translation adjustment 4.3 1.9
Free cash flow 445.4 231.9
7. Cash Conversion
Cash conversion is defined as free cash flow, expressed as a percentage of
adjusted earnings after taxation. Cash conversion is an important metric as it
measures how much of the Group's adjusted earnings is converted into cash.
H1 2024 H1 2023
€'m €'m
Free cash flow 445.4 231.9
Profit after taxation attributable to equity holders of the parent 291.5 358.2
Brand related intangible asset amortisation 27.6 26.5
Non-trading items (net of related tax) 20.2 (65.0)
Adjusted earnings after taxation 339.3 319.7
Cash conversion 131% 73%
8. Liquidity Analysis
The Net debt: EBITDA and EBITDA: Net interest ratios disclosed are calculated
using an adjusted EBITDA, adjusted finance costs (net of finance income) and
an adjusted net debt value to adjust for the impact of non-trading items,
acquisitions net of disposals and deferred payments in relation to
acquisitions.
H1 2024 H1 2023
Times Times
Net debt: EBITDA 1.6 1.6
EBITDA: Net interest 23.2 19.0
9. Average Capital Employed
Average capital employed is calculated by taking an average of the
shareholder's equity less vendor loan note and net debt over the last three
reported balance sheets.
H1 2024 2023 H1 2023 2022 H1 2022
€'m €'m €'m €'m €'m
Equity attributable to equity holders of the parent 6,512.8 6,521.3 6,356.5 6,221.9 6,088.7
Vendor loan note (128.0) (124.3) (125.0) - -
Net debt 1,843.9 1,604.1 1,846.5 2,217.4 2,456.3
Total capital employed 8,228.7 8,001.1 8,078.0 8,439.3 8,545.0
Average capital employed 8,102.6 8,172.8 8,354.1
10. Return on Average Capital Employed (ROACE)
This measure is defined as profit after taxation attributable to equity
holders of the parent before non-trading items (net of related tax), brand
related intangible asset amortisation and finance income and costs expressed
as a percentage of average capital employed. ROACE is a key measure of the
return the Group achieves on its investment in capital expenditure projects,
acquisitions and other strategic investments.
12 months to 12 months to
H1 2024 H1 2023 FY 2023
€'m €'m €'m
Profit after taxation attributable to equity holders of the parent 661.6 737.0 728.3
Non-trading items (net of related tax) 67.8 (2.9) (17.4)
Brand related intangible asset amortisation 53.4 54.3 52.3
Net finance costs 50.6 59.6 50.3
Adjusted profit 833.4 848.0 813.5
Average capital employed 8,102.6 8,354.1 8,172.8
Return on average capital employed 10.3% 10.2% 10.0%
11. Net Debt
Net debt comprises borrowings and overdrafts, interest rate derivative
financial instruments, lease liabilities and cash at bank and in hand. See
full reconciliation of net debt in note 9 of these Condensed Consolidated
Interim Financial Statements.
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. END IR KZGFNLGMGDZMRecent news on Kerry
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