TIDMKYGA
RNS Number : 8565L
Kerry Group PLC
30 April 2015
News release
30 April 2015
Kerry Group: Interim Management Statement
30 April 2015 - Kerry, the global ingredients & flavours and
consumer foods group, issues the following Interim Management
Statement for the first quarter ended 31 March 2015. This statement
is issued in conjunction with the Group's Annual General Meeting
which is being held today.
First Quarter Highlights
* 2.5% growth in business volumes
Ø Ingredients & Flavours +2.9%
Ø Consumer Foods +1.4%
* Group trading margin up 40 basis points
Ø Ingredients & Flavours +40 bps
Ø Consumer Foods +20 bps
* Earnings guidance for full year reaffirmed
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Business PERFORMANCE
The Group achieved a good start to the year maintaining the
positive momentum reported in Q4 2014. While global retail food and
beverage markets continue to be challenged by consumer trends
towards more convenient shopping formats and broader channels,
demand for innovation in health / wellness and nutritional
offerings provided solid opportunities for growth of Kerry's Taste
and Nutrition technologies. Kerry achieved an improved performance
in EMEA markets. American markets maintained positive momentum
despite inflationary pressures in Brazil. Whilst strong business
development continues to be achieved in Asia, reported growth
slowed slightly due primarily to high inventory levels in
China.
Market conditions in the UK and Irish consumer foods sectors
have broadly stabilised. The repositioned Kerry Foods portfolio
performed well benefiting from snacking trends and a good recovery
in meal solutions.
Business volumes grew by 2.5% on a Groupwide basis - slightly
ahead of the Q4 2014 level of growth. Net pricing was 2.4% lower,
reflecting reduced raw material costs. Reported revenues increased
by 4.5% relative to Q1 2014, reflecting the business volume growth,
lower pricing, 6.9% positive translation impact due to significant
currency tailwinds and (2.5%) business disposal impact.
Business trading performance continued to improve reflecting
Groupwide business operational improvements, improved product mix
and the portfolio repositioning in Kerry Foods. The Group trading
profit margin increased by 40 basis points, reflecting a 40 basis
points improvement in ingredients & flavours and a 20 basis
points improvement in Kerry Foods relative to Q1 2014.
BUSINESS REVIEWS
INGREDIENTS & FLAVOURS
Kerry's Taste & Nutrition technologies and Functional
Ingredients & Actives platforms achieved sustained business
development across developed and developing markets. Business
volumes increased by 2.9% while pricing was 2.3% lower relative to
the first quarter of 2014. Divisional trading profit margin
increased by 40 basis points as a result of the Group's business
performance and efficiency programmes.
The Americas Region performed satisfactorily delivering 2.9%
volume growth despite the adverse impact of consumer trends in some
sectors. Kerry Taste technologies achieved good growth in the meat
sector, with performance in the North American culinary segments
assisted by Wynnstarr Flavors. Junior Alimentos, acquired in Q4
2014, performed in line with expectations in culinary and sweet
foodservice segments in Brazil. The Group's 'Dairy Complete'
offering continues to generate a good pipeline of growth throughout
American markets. Clean label technologies continued to drive
growth in the bakery sector. While traditional cereal markets
remain challenged, snacking segments provided encouraging growth
opportunities. Beverage systems & flavours maintained a strong
business performance in particular the North American aseptic and
nutritional applications. Foodservice markets again provided strong
growth opportunities, in particular for Kerry's branded food and
beverage offerings. Pharma ingredients maintained solid growth
through excipient and cell nutrition applications.
While overall market conditions in the EMEA Region were broadly
unchanged, Kerry achieved an improved performance in the region,
with business volumes increased by 0.6% compared to the same period
of 2014. Despite continuing geopolitical issues, business
performance in regional developing markets showed satisfactory
improvement. In the dairy sector Kerry's 'Dairy Complete' offering
has achieved encouraging business development. Sales in the meat
sector were lower except in Eastern Europe. Sweet applications grew
satisfactorily in the ice cream and bakery sectors. Beverage
systems & flavours maintained a positive business development
momentum. Market conditions in Sub-Saharan-Africa recovered
relative to Q1 2014. Russia provided good business growth
opportunities notwithstanding the economic impact of political
issues. MENAT market conditions remain subdued.
Nutritional applications, developed through continued investment
at the Group's facilities in Ireland, again recorded strong growth
across all life-stage end-use-markets, particularly in the infant
sector in Asia. Primary dairy market price returns weakened further
in Q1 2015 due to a continuing increase in output in exporting
countries and softer demand conditions in importing countries.
Kerry continued to successfully advance its Taste and Nutrition
market development programmes throughout the Asia Pacificregion in
Q1 2015 but the level of growth was below the high prior year
comparative level. Business volumes increased by 8.1%. Strong
development continued across Asian foodservice markets with
successful launches through savoury and beverage systems. Kerry's
branded beverage offerings continued to broaden listings throughout
the region. Meat systems achieved good growth in Thailand. Dairy
systems and 'Dairy Complete' continued to achieve business wins in
Indonesia, the Philippines, China and Vietnam. Premium sauce
systems achieved good growth in Malaysia and China. Excellent
growth was achieved in India through beverage flavours,
emulsifiers, texturants and meat systems.
Regional developed markets, in particular Australia and New
Zealand continue to be impacted by industry and retail competitive
issues. However Kerry achieved solid momentum through sauce
systems, coatings and beverage applications in the Australian
foodservice sector. At year-end results stage, the Group confirmed
that the sale of the Pinnacle lifestyle bakery business in
Australia was at an advanced stage. This transaction is expected to
complete by the end of May.
Consumer foods
While retail pressures, channel and structural changes in the UK
and Irish consumer foods markets continue to impact market
competitiveness, nevertheless chilled convenience and snacking
market sectors reflect more stabilised trading market conditions.
Kerry Foods' repositioned portfolio has achieved encouraging
results to-date. In Q1 2015, divisional business volumes increased
by 1.4% relative to the first quarter of 2014, while pricing
decreased by 2.6%. The improved business mix and trading
performance contributed to the division's 20 basis points increase
in trading margin.
In the meal solutions sector, Kerry Foods achieved a strong
performance in its chilled ready meals accounts in the quarter.
Volumes also increased in the frozen meals market. Retailer EDLP
pricing strategies impacted performance in the UK sausage market.
Mattessons Fridge Raiders maintained good growth in the meat
snacking sector. In January Rollover Ltd was acquired further
extending Kerry Foods' 'hot-to-go' offering and broadening
distribution in the leisure and foodservice segments of the UK
market. The customer branded dairy spreads category was impacted by
heavily promoted branded butter offerings.
In Ireland the relaunched Denny Gold Medal sausage brand
continues to perform well. The Charleville cheese brand achieved
good growth in the quarter. Cheestrings continues to invest in
broadening its geographic market reach in mainland European
markets. The 'Yollies' children's yoghurt snack introduced to the
Irish and UK markets during 2014 continues to achieve encouraging
market penetration.
As previously announced, the Kerry Foods' Direct-to-Store
business in the UK was disposed of in January 2015.
financial review
At the end of March net debt stood at EUR1.4 billion. The
increase in net debt since year-end reflects the impact of currency
translation, capital expenditure and investment in working
capital.
Following a limited syndication process, the Group has agreed a
new EUR1.1bn revolving credit facility replacing the existing
facility which matures in April 2016. The syndication was more than
two times oversubscribed. The facility provides a line of committed
debt, thereby significantly extending the maturity profile of Group
debt which can be used to retire existing debt and for general
corporate purposes.
Post balance sheet events
In April, Kerry and IOI Loders Croklaan reached agreement to
form a joint venture company to develop and market the nutrition
lipid Betapol(R) business. The joint venture partnership will
significantly extend the Betapol(R) portfolio for infant nutrition
and broaden application to other key nutrition market segments
globally.
Agreement has been reached to acquire U.S. based Insight
Beverages, a leading supplier of custom beverage solutions,
including cocoa and coffee speciality offerings, fruit-flavoured
beverages, and functional beverages to the foodservice and
convenience store channels in North American markets. The
acquisition is expected to complete by the end of May.
FUTURE PROSPECTS
The Board is confident of delivering full year earnings growth
as previously guided.
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 Ronan Deasy, Group Financial Controller
Email: corpaffairs@kerry.ie William Lynch, Head of Investor
Kerry Web Site: www.kerrygroup.com Relations
Tel: +353 66 718 2253
Email: investorrelations@kerry.ie
==================================== ===============================================
DISCLAIMER: FORWARD LOOKING STATEMENTS
This Announcement contains forward looking statements which
reflect management expectations based on currently available data.
However actual results may differ materially from those expressed
or implied by these forward looking statements.
These forward looking statements speak only as of the date they
were made and the Company undertakes no obligation to publicly
update any forward looking statement, whether as a result of new
information, future events or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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