TIDMKYGA
RNS Number : 3907S
Kerry Group PLC
06 November 2019
06 November 2019
Kerry Group
Interim Management Statement
Kerry, the global taste & nutrition and consumer foods
group, issues the following Interim Management Statement for the
nine months ended 30 September 2019.
Q3 YTD KEY HIGHLIGHTS
-- 3.1% growth in business volumes
- Taste & Nutrition +3.9%
- Consumer Foods -0.7% (excluding contract exit +0.6%)
-- Pricing -0.1%
-- Reported revenue +10.0%
-- Group trading margin +20bps
- Taste & Nutrition +20bps
- Consumer Foods maintained
-- Earnings guidance for full year reaffirmed
Edmond Scanlon - Chief Executive Officer Statement
"We are pleased with our performance to date in the period, with
volume growth ahead of our markets combined with margin expansion.
We enjoyed strong growth in developing markets, as we further
deploy our technology and continue our strategic footprint
expansion. We continued to make strategic acquisitions, and good
progress has been made on the integration of acquisitions completed
over the last 12 months which are performing well. We reaffirm our
full year 2019 guidance of adjusted earnings per share growth of 7%
to 9% on a constant currency basis."
Contact Information
Media
Catherine Keogh VP Corporate Affairs +353 66 7182304 corpaffairs@kerry.com
& Communications
Investor Relations
Marguerite Chief Financial +353 66 7182292 investorrelations@kerry.ie
Larkin Officer
William Lynch Head of Investor +353 66 7182292 investorrelations@kerry.ie
Relations
Website
www.kerrygroup.com
Group Performance & Markets
Group reported revenue increased by 10.0%, reflecting business
volume growth of 3.1%, a pricing decrease of 0.1%, acquisition
contribution of 4.7%, and a favourable translation currency impact
of 2.3%. Group trading margin increased by 20bps, reflecting a
20bps improvement in Taste & Nutrition while Consumer Foods
margins were maintained.
Major global consumer trends such as clean label, authentic
taste, plant-based diets, healthfulness, convenience,
sustainability and premiumisation, tailored to local consumer
preferences continue to generate increased innovation
opportunities. As our customers continue to meet these rapidly
changing consumer demands and increase speed to market, Kerry is
best positioned as the holistic partner of choice with our unique
business model and industry-leading taste and nutrition technology
portfolio.
Business Reviews
Taste & Nutrition
-- Volume growth of 3.9% driven by Meat, Snacks and Beverage End Use Markets (EUMs)
-- Pricing +0.1% - reflecting broadly neutral raw material costs in the period
-- Trading margin +20bps - key drivers were enhanced product
mix, operating leverage and efficiencies, partially offset by
investments for growth and Brexit risk management costs
Kerry's nutrition and wellbeing technology portfolio had a
strong performance in the period, as demand for great-tasting
products with improved nutritional attributes continued to
accelerate across the globe. Our unique taste and nutrition
positioning, food science expertise and deep understanding of the
intersection of taste and nutrition were the drivers of increased
innovation across a wide range of applications. This led to good
sales growth in customised solutions incorporating in particular
Kerry's fermented ingredients, broad protein portfolio, probiotics,
fibre systems, botanicals and natural extracts.
Developing market growth continued to be strong at 9.5%, with
developing markets in APMEA being the main driver. Foodservice
performed well, with growth of 5.1% despite softness in certain
developed markets.
Americas Region
-- 2.6% volume growth
-- Solid performance in North America, driven by Meat and Snacks EUMs
-- LATAM performed well
North America delivered solid volume growth against a backdrop
of softer market volume growth rates, with heightened pricing at a
consumer level continuing to impact overall consumption levels. The
Meat and Snacks EUMs continued to deliver good growth, while the
Meals EUM and other traditional centre of store categories were
more challenged. LATAM delivered good growth in the period led by
strong growth in the Snacks and Dairy EUMs. The Group also
completed the acquisition of ComeIn Food Systems - a Mexican
producer of seasonings and marinades, complementing our leading
offering for the Meat EUM in the region.
The global Pharma EUM had a good performance, led by strong
growth in excipients in North America.
The recent acquisitions of Fleischmann's (FVC) business,
Southeastern Mills (SEM) and Ariake U.S.A. all performed well and
integration is progressing to plan. These acquisitions were
complemented by the acquisitions of Isoage Technologies and
Biosecur Lab in the third quarter, which further enhance Kerry's
leading food protection and fermentation capability, adding to our
portfolio of natural preservation solutions.
Europe Region
-- 2.3% volume growth
-- Good performance in Beverage, Meat and Snacks EUMs
-- Northern Europe & Russia delivered good growth and business development
The region delivered good growth in the period, with the
Beverage, Meat and Snacks EUMs performing well. The Beverage
category continues to evolve at pace, with enhanced nutrition and
wellness products as well as seasonal offerings coming to market.
The Meat EUM delivered strong growth through clean-label and smoke
innovations, while there continues to be very good business
development within meat-free. The Snacks EUM performed well with a
number of launches incorporating new authentic world flavours as
well as our TasteSense(TM) sugar-reduction technology, while the
Dairy EUM was impacted by softer demand in the ice- cream category
during the period. The Group also completed the acquisition of
Pevesa Biotech - a specialist plant protein isolates and
hydrolysates business based in Spain and serving key nutrition
applications.
APMEA Region
-- 9.9% volume growth
-- Strong growth in Meat, Beverage and Snacks EUMs
-- Progressing strategic expansion and business development across the region
Kerry delivered a very strong performance in the period, as the
Group continued to successfully deploy the Kerry business model on
a country by country basis across the region. The Meat EUM
delivered excellent growth as our customers continued to meet key
consumer preferences for local authentic taste, value, food safety
and home delivery. Kerry's Beverage EUM continued to perform
strongly as the category evolves at pace within both the retail and
foodservice channels. The Snacks EUM delivered strong growth,
particularly with savoury taste innovations meeting local consumer
preferences.
We continued to make good progress in expanding our capacity and
deploying our technology capabilities in the region. Our strategic
expansion in China progressed well, as we upgraded the recently
acquired SIAS facility to serve our customers in the Greater
Beijing region, and continued the expansion programme at our
Nantong facility. In June, the Group opened a new facility in
Tumkur, India, which will serve the rapidly expanding South West
Asia market. Further to the acquisition of AATCO at the end of
2018, the Group also invested in expanding our capabilities in the
Middle East region.
Consumer Foods
-- Volume -0.7% (excluding contract exit +0.6%)
-- Pricing -0.6% reflective of market pricing and input costs not fully recovered
-- Trading margin maintained with efficiencies offset by pricing
and Brexit risk management costs
Overall volumes in the period were muted, reflective of a
subdued marketplace and the impact of the previously reported loss
of a ready meals contract. Within 'Everyday Fresh' the Richmond
chilled sausage range achieved good growth, while the spreads
category remained challenged. Within 'Convenience Meal Solutions'
the chilled meals sub-category continued to be impacted by reduced
promotional activity, while the frozen meals sub-category had a
good performance across the range. 'Food to Go' performed well, as
strong growth in Cheestrings was complemented by a number of new
listings. Fridge Raiders also extended their snacking range to
reach a broader consumer market. The Group recently launched a
number of new plant-based products under the Naked Glory and
Richmond brands. The realignment for growth programme is
progressing in line with expectations and is well advanced.
Financial Review
At the end of September, net debt was EUR2.0 billion. The
Group's consolidated balance sheet remains strong which will
facilitate the continued organic and acquisitive growth of Group
businesses.
Future Prospects
The Group reaffirms its full year 2019 guidance of adjusted
earnings per share growth of 7% to 9% on a constant currency
basis.
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 Group 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 news service of the
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END
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