REG - Kerry Group PLC - Q1 Interim Management Statement 2025

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RNS Number : 9320G  Kerry Group PLC  01 May 2025

1 May 2025

LEI: 635400TLVVBNXLFHWC59

 

KERRY GROUP

Q1 Interim Management Statement 2025

Good volume growth and strong margin expansion.

FIRST QUARTER HIGHLIGHTS(1)

 

 >    Volume growth of 3.1% and pricing of 0.2%

 >    Reported revenue growth of 6.3%

 >    EBITDA margin expansion of 90bps

 >    Net debt of €1.9bn

 >    Further €300m share buyback programme post completion of existing
 programme

 >    Full year constant currency EPS guidance maintained

 

 

 Edmond Scanlon, Chief Executive Officer
 "We delivered a good overall performance in the first quarter, particularly
 given market conditions. We achieved good volume growth in the Americas and
 APMEA, with Europe similar to the prior year. Our strong EBITDA margin
 expansion was led by efficiencies delivered through Accelerate operational
 excellence.

 Against a backdrop of highly dynamic macroeconomic conditions, our extensive
 local footprint, our unique offering, and the strength of our business model
 positions us well to navigate through this period, supporting our customers as
 their innovation and renovation partner.

 While recognising the heightened level of market uncertainty, we remain well
 positioned for good volume growth and strong margin expansion, and we maintain
 our full-year constant currency earnings guidance."

¹ Continuing operations (post divestment of Kerry Dairy Ireland, which was
presented as discontinued operations in the FY2024 financial statements).

Performance and Markets

Reported revenue increased by 6.3% in the period, comprising volume growth of
3.1%, positive pricing of 0.2%, favourable transaction currency of 0.5%,
favourable translation currency of 1.7% and contribution from acquisitions net
of disposals of 0.8%. Continuing business EBITDA margin increased by 90bps
primarily driven by cost efficiencies, contribution from acquisitions,
operating leverage and portfolio mix.

End market conditions in the period reflected generally cautious consumer
behaviour, given the level of macroeconomic uncertainty across different
geographies. Customer product innovation centred around new and differentiated
flavour combinations and healthier options, while product renovation activity
focused on enhancing product nutritional characteristics and solutions to
address challenges in global raw material supply chains.

Business Review

Growth led by performance in foodservice and emerging markets

>   Volume growth of 3.1%

>   Growth led by Beverage, Bakery and Snacks

>   Pricing of 0.2% reflected input cost inflation in places

The business delivered good volume growth in the period given overall consumer
market demand.

Foodservice continued its outperformance with volume growth of 4.7%, driven by
new menu innovations, seasonal products, and solutions to reduce operational
cost and complexity. Growth in the retail channel was supported by an increase
in nutritional enhancement renovation activity with a range of customers.

Growth in the period was led by Beverage, Bakery and Snacks end markets,
supported by strong growth in savoury taste and Tastesense(™) salt and sugar
reduction technologies, as well as integrated solutions incorporating Kerry's
botanicals, natural extracts and enzymes.

Business volumes in emerging markets increased by 6.4% in the period, led by a
strong performance in Southeast Asia.

Within the Pharma & Other EUM, volume growth was driven by cell nutrition
and excipients.

Regional Review

Americas Region

>   Volume growth of 3.5%

>   Growth led by Bakery, Snacks and Dairy

>   Retail delivered good growth with foodservice performing well

>   LATAM growth led by Brazil and Central America

Growth in the period reflected good performances in both North America and
LATAM.

Within North America, Bakery achieved strong growth driven by integrated
solutions incorporating Kerry's taste and texture systems as well as enzymes.
Snacks delivered strong growth through innovations utilising Kerry's range of
savoury taste profiles and Tastesense(™) salt reduction technologies, given
continued customer focus on improving the nutritional profiles of their
products. Growth in Dairy was driven by the strong performance of taste
technologies, while performance within the Meat end market reflected softer
overall category volumes.

Within the retail channel, growth was supported by renovation activity across
customer and retailer brands, while growth in the foodservice channel was led
by quick service and fast casual restaurants.

Within LATAM, strong growth was achieved in Brazil and Central America across
the Snacks and Meals end markets in particular.

Europe Region

>   Volume growth of 0.1%

>   Beverage and Bakery achieved good growth

>   Good performance in foodservice, with softer dynamics in the retail
channel

Good growth was achieved in Beverage supported by new refreshing beverage
innovations incorporating Kerry's integrated taste technologies and proactive
health ingredients, with increased customer innovation activity for Kerry's
all-natural citrus flavour extender technology across beverage applications
against a backdrop of global supply chain challenges. Growth in Bakery was led
by performance in texture systems, with softer dynamics within the Meals and
Dairy markets.

Growth in foodservice was led by quick service restaurants and coffee chains,
while softer retail channel volumes reflected subdued demand.

APMEA Region

>   Volume growth of 5.1%

>   Strong performance in Southeast Asia and the Middle East

>   Growth led by Beverage, Bakery and Snacks

Performance in the region was primarily driven by strong growth in Southeast
Asia, the Middle East and Africa, with volumes in China remaining challenged.

Beverage achieved strong growth across refreshing, nutritional and functional
beverages through integrated solutions incorporating Kerry's natural extracts,
botanicals and Tastesense(™) sugar reduction technologies with local and
regional customers. Performance in Bakery was driven by food protection and
preservation systems, as well as customer reformulation activity in areas
including cocoa, given supply challenges. Volume growth in Snacks was driven
by continued strong performance in savoury taste with leading global and
regional customers.

Foodservice delivered strong volume growth with leading regional coffee chains
and quick service restaurants, while growth in the retail channel was driven
by Kerry's range of local authentic taste profiles.

During the period there was continued investment in expanding capacity in
Southeast Asia and Africa to meet local customer demands.

Financial Review

At the end of March, net debt was €1.9 billion reflecting cash generation,
capital investment and the share buyback programme. Kerry's consolidated
balance sheet remains strong, which will facilitate the continued strategic
development and growth of the business.

As of the end of March, Kerry had repurchased €185m of ordinary shares from
the €300m programme that was initiated in November 2024. Aligned to its
Capital Allocation Framework, Kerry intends to initiate a further share
buyback programme of up to €300 million of Kerry Group plc ordinary shares
post the completion of the existing programme. A formal announcement will be
made prior to its launch. As previously announced, Kerry has proposed a final
dividend of 89.0 cent per share for approval at the Annual General Meeting.

Outlook

Against the backdrop of highly dynamic macroeconomic conditions and the
continually evolving tariff and global trade landscape, Kerry's extensive
local footprint, global sourcing network, and customer-centric business model
positions it well to navigate through this period.

While recognising a heightened level of market uncertainty, Kerry remains well
positioned for good volume growth and strong margin expansion, as it supports
its customers as an innovation and renovation partner.

Kerry maintains its full year constant currency earnings per share guidance
growth of 7% to 11%.

Note: Guidance range based on adjusted earnings per share of €467.5 cent for
FY 2024 | Guidance range stated post ~2% dilution in 2025 from the Phase 1
disposal of Kerry Dairy Ireland, which completed on 31 December 2024 | Foreign
currency translation expected to be a headwind of 3-4% on earnings per share
in 2025 | Guidance based on average number of shares in issue of ~165m.

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 930188 | corpaffairs@kerry.com

   WEBSITE
   www.kerry.com

 

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