TIDMKYGA
RNS Number : 3644R
Kerry Group PLC
02 November 2011
nEWS RELEASE
2 November 2011
Kerry Group: Interim Management Statement
2 November 2011 - Kerry, the global ingredients & flavours
and consumer foods group, issues the following Interim Management
Statement for the nine months to 30 September 2011.
Business PERFORMANCE
In line with the business momentum reported at the half year
stage, the Group continued to achieve good organic growth in the
three month period to 30 September 2011. While continuing input
cost inflation impacted some categories, performance was solid
across all regions. Cost recovery in collaboration with customers
proved successful despite the well reported economic challenges and
restrained consumer expenditure in many markets.
Group sales revenue in the first nine months of 2011 increased
by 7.9% reflecting like-for-like [LFL] growth of 7.3%. Business
volumes grew by 3.4% with product pricing/mix increasing by 4%.
Relative to the first nine months of 2010, business volumes were
ahead 3.9% in ingredients & flavours and 1.6% in the Group's
consumer foods division.
Consistent with the half year Interim Statement, the Group's
underlying trading margin performance remained strong in the
period. Allowing for unallocated development costs relating to the
Kerry global IT project and the arithmetical effect which cost
recovery pricing has on the margin calculation, the Group trading
profit margin was back 30 basis points relative to the same period
of 2010. This reflects a flat margin impact in Ingredients &
Flavours and a 30 basis points lower margin in Consumer Foods.
INGREDIENTS & FLAVOURS
Successful layering of Group technologies and focused
end-use-market innovation continued to achieve encouraging growth
throughout Kerry Ingredients & Flavours' regional markets. The
challenging economic landscape continues to focus critical
attention on consumer offerings thereby driving significant product
renovation and innovation.
In the Americas region, despite tougher market conditions and
the background of input cost inflation, Kerry achieved 3.6% growth
in business volumes. Savoury & Dairy systems continued to
perform well - in particular through yoghurt applications in the
dairy sector and through coating systems in the meat industry.
Cereal and sweet categories remained challenging due to competitive
trends and delayed product launches. However Kerry maintained good
progress particularly in the bakery sector through its integrated
solutions approach incorporating flavours and functional
ingredients. Beverage systems & flavours achieved good growth
through Kerry's branded portfolio.
The Group continued to expand its global market positioning in
the pharmaceutical sector. In September, Lactose [India] Limited
was acquired - broadening the Group's Sheffield Bio-Science product
portfolio and strengthening Sheffield's expertise and technical
service to advance Kerry Group's growth strategy in South Asia's
growing pharmaceutical marketplace.
In the EMEA region Kerry's business volumes reflect 2.6%
regional growth in the nine months to the end of September. Overall
performance was above industry average but varied across
end-use-markets and regional markets due to cost pressures arising
from raw material pricing. Snack applications continued to provide
good growth opportunities for cheese systems and seasonings.
Development in the meat sector was constrained due to challenging
sectoral issues but poultry applications progressed satisfactorily
in the QSR segment. Sweet systems achieved good growth in
particular through confectionery, yoghurt and bakery applications.
Kerry maintained solid growth in the challenging ready-to-eat
cereals category. Flavour technologies and demand for all-natural
flavour systems continued to provide good growth opportunities in
the beverage sector. Solid volume growth was maintained through
Kerry's functional ingredients. Primary dairy markets remained firm
during the period - benefiting from continued strong demand in
importing countries.
Asia-Pacific markets continued to provide solid growth
opportunities for Kerry's ingredients & flavours systems and
functional ingredients. In the first nine months of 2011 business
volumes in the region grew by 10.1%. Meat technologies grew
strongly in Australia, New Zealand and in the expanding regional
QSR sector. Dairy and lipid systems again achieved good growth in
the nutritional sector. Kerry Pinnacle continued to grow strongly
through value propositions in the lifestyle bakery sector. Kerry's
beverage systems and flavours continued to benefit from progressive
development and roll-out across the regional QSR sector.
Emulsifiers achieved double digit growth.
Consumer foods
The competitive consumer and retail environment in Ireland and
the UK led to increased promotional activity impacting business
growth strategies in Kerry's consumer foods businesses. However
Kerry Foods achieved 1.6% volume growth in the nine months to the
end of September - reflecting 2.8% growth in the UK and a decline
of 2% in Ireland.
The Richmond and Mattessons brands performed robustly in the UK
market. Cheestrings maintained market share in the highly
competitive cheese snack market.
In customer-branded segments of the UK market Kerry again
achieved a strong performance through its chilled ready meals
offerings. In the frozen meals category Headland Foods, acquired in
January, performed in-line with expectations. On 25 October the
Competition Commission provisionally cleared Kerry Foods
acquisition of Headland Foods and will publish its final report
before year-end.
Performance in the private label spreads and cheese sector in
the UK was adversely impacted by heavy promotional campaigns by
major brands.
The Irish consumer foods market remains difficult as consumers
continue to seek value propositions and retailers respond through
deeper promotional activities. Brand shares of Kerry's key Irish
brands remain stable and have achieved growth through launch of
value lines.
BUSINESS DEVELOPMENT
In September the Group confirmed that it had entered into an
agreement to acquire Cargill's global flavours business. Cargill
Flavor Systems has well-established international flavour
technology development expertise serving a global customer base
through provision of flavour ingredients and flavour systems for
beverage, dairy, sweet and savoury applications. The business has
long-standing relationships with leading global food and beverage
manufacturers and employs 700 people through its integrated flavour
development and application centres in France, the UK, South
Africa, India, Malaysia, China, the USA, Puerto-Rico, Mexico and
Brazil, supported by a network of sales representative offices in
12 other countries. The transaction is expected to be completed by
year-end.
At the end of October the Group completed the acquisition of
SuCrest GmbH ["SuCrest"], significantly expanding the Group's sweet
ingredients & flavours business in the EMEA region. SuCrest,
with production and product development facilities located in
Hochheim, Germany and Vitebsk, Belarus and a SuCrest sales
representative office in Moscow, is a leading provider of sweet
ingredients to the bakery, ice-cream, confectionery, cereal and
snack sectors in European markets.
The Group has made considerable progress in design of optimal
Kerry Operating Models to deliver our business strategies.
Operating model implementation will commence at the beginning of
2012 enabling the Group to leverage the increasing scale of the
organisation, to deliver global alignment, to realise potential
synergies and maximise business efficiencies.
Financial review
Net debt at the end of the period at EUR1.2 billion is slightly
higher than that reported at the half year stage due to movement in
exchange rates [primarily the US dollar] and increased investment
in the Group's 1 Kerry business transformation programme and
working capital.
Future prospects
The Group is confident of achieving its growth targets for the
full year and delivering eight to twelve per cent growth in
adjusted earnings per share.
- ends -
For further information please contact:
Media Investor Relations
Frank Hayes, Director of Corporate Brian Mehigan, Chief Financial
Affairs Officer
Tel: +353 66 718 2304 Michael Ryan, Head of Investor
Email: corpaffairs@kerry.ie Relations
Kerry Web Site: www.kerrygroup.com Tel: +353 66 718 2253
Email: investorrelations@kerry.ie
========================================== =========================================
This information is provided by RNS
The company news service from the London Stock Exchange
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