TIDMKYGA
RNS Number : 4514L
Kerry Group PLC
30 April 2020
30 April 2020
Kerry Group - Q1 Interim Management Statement
Kerry, the global taste & nutrition and consumer foods
group, issues the following Interim Management Statement for the
first quarter ended 31 March 2020. This statement is issued in
conjunction with the Group's Annual General Meeting which is being
held today.
FIRST QUARTER HIGHLIGHTS
-- Group reported revenue +3.4%
-- Business volume growth +0.2% (+3.7% excluding one-off items(1))
-- Pricing +0.5%
-- Group trading margin maintained (+30 bps excluding one-off items)
-- Earnings guidance withdrawn due to uncertainty around duration and impact of COVID-19
(1) comprising net estimated COVID-19 impact and contract exit
in Consumer Foods
Edmond Scanlon - Chief Executive Officer Statement
"The COVID-19 pandemic is a truly unprecedented event, impacting
the daily lives of people across the world. At Kerry, we recognise
we have an important role to play throughout this crisis, and we
have taken early and decisive action; protecting our 26,000
employees across our global footprint, working with our customers
to ensure that products make their way to consumers around the
world, while supporting our local communities. Our global supply
chain remains robust, thanks to the tremendous efforts of our
operations teams right across our entire manufacturing footprint of
150 plants.
We made a strong start to the year, with good underlying
performance and particularly strong growth in the Americas. Since
March, the restrictions on movement have significantly impacted
customer demand beyond China and across the foodservice channel.
Based on the current restrictions, we expect the impact on second
quarter performance to be much more significant than the first
quarter. We continue to support our customers through this period
and are working on a number of actions to mitigate the COVID-19
impact, including helping them move their offerings across channels
and categories, planning for post-restriction product launches,
while implementing internal cost actions.
I am immensely proud of our peoples' response to this challenge,
with our actions throughout being strongly aligned to our purpose
and values. These actions enhance Kerry's role as our customers'
most valued partner, as we help them navigate the short-term
disruption, while embracing the new opportunities created as a
result of evolving consumer demands across the globe."
C ontact Information
Media
Catherine Keogh VP Corporate Affairs +353 66 7182304 corpaffairs@kerry.ie
& 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
Markets & Performance
Consumer demands for nutrition and wellness, trusted ingredients
and sustainability have continued to increase at pace over recent
months. Consumers' purchasing and consumption behaviours have been
significantly disrupted, leading to new challenges and
opportunities across the marketplace. These consumer-driven changes
are impacting the end-to-end supply chain, as retailers and
customers seek to quickly adapt to address these evolving needs.
Kerry's industry-leading taste and nutrition technology portfolio,
co-creation model and solutions capability continue to enable
customers to react at speed through this period of volatility.
Group reported revenue increased by 3.4% in the period,
reflecting business volume growth of 0.2%, a pricing increase of
0.5% primarily due to higher raw material prices in the Consumer
Foods division, a transaction currency impact of 0.1%, contribution
from business acquisitions of 1.3% and a favourable translation
currency impact of 1.3%. Group trading margin was maintained, with
Taste & Nutrition's trading margin in line with last year and
Consumer Foods trading margin expanding by 10bps.
Business Reviews
Taste & Nutrition
-- Volume growth of 1.2% (4% growth excluding estimated COVID-19 impact)
-- Good volume growth in Food (particularly Snacks and Dairy), Beverage and Pharma EUMs
-- Pricing +0.1% reflecting broadly neutral raw material costs in the period
-- Trading profit margin maintained - as growth of 30bps driven
by enhanced product mix and operating leverage was offset by
COVID-related costs
Taste & Nutrition had a good underlying performance in the
period, led by strong growth in the Americas, a solid performance
in Europe, and with APMEA delivering strong growth excluding the
impact of COVID-19. Kerry's nutrition and wellness technology
portfolio had a strong performance and very good business
development, further advancing its position as the industry's
leading nutrition and wellness partner across beverage and food
markets.
Business volumes in the foodservice channel declined 0.7%, and
in developing markets there was a decline of 0.8% in the period, as
the impact from restrictions on movement in China extended into a
number of other countries in APMEA and Europe in the latter part of
March. In the period the Group completed the acquisition of
TecniSpice Guatemala - a leading savoury taste business based in
LATAM. In March, the Group announced the strategic development of
its Georgia, US facility, creating a world-leading manufacturing
facility to meet increasing demand for integrated solutions across
a variety of protein applications.
Americas Region
-- 3.2% volume growth
-- Strong growth in North America, driven by Beverage and Snacks
-- LATAM performed well - with strong growth in Mexico
In North America, Kerry's Beverage EUM achieved strong
broad-based growth across a number of categories, from nutritional
beverage, tea & coffee to plant-based offerings. Kerry's
positioning as the nutrition and wellness partner of choice is
leading to strong business development opportunities across the
beverage landscape. Snacks delivered very strong growth through
healthier snacking and new combinations of world flavours. Within
Meals, the recently acquired Ariake U.S.A. business performed
well.
In LATAM, Mexico achieved strong growth led by Snacks, while
Brazil and Central America delivered a solid performance. The Group
also expanded its presence in the region with the acquisition of
TecniSpice Guatemala in the period. The global Pharma EUM delivered
very strong growth, led by Kerry's Wellmune immunity enhancing
technology.
Europe Region
-- 1.0% volume growth
-- Good growth in Meat, Meals and Snacks
-- Russia and Eastern Europe delivered very good growth
The region delivered a good underlying performance in the
period, prior to restrictions on movement in March impacting the
foodservice channel across a number of countries. Meat achieved
very good growth and business development, in particular with
clean-label solutions and plant-based innovations with a number of
global and regional leaders. Meals performed well, as clean-label
solutions for sauce and marinade applications delivered good
growth. Snacks had a good performance in the period, through a
number of launches incorporating Kerry's authentic taste profiles.
Russia and Eastern Europe performed very well, as we continued to
develop our presence and offering across the regions.
APMEA Region
-- 3.5% volume decline - as restrictions on movement impacted beyond China in March
-- Strong underlying performance in Meat, Dairy & Bakery
-- Continued strategic expansion and business development
Business volume growth in the period was significantly impacted
by restrictions in China, with the foodservice channel in a number
of other markets also being affected in March. We estimate volume
growth in the quarter would have been at a high single digit level,
reflecting a strong underlying performance prior to the impact of
COVID-19.
Meat delivered very strong growth through customer partnerships
with a number of new innovations to meet key consumer needs for
authentic cooking taste profiles, value and food safety. Dairy
performed well with good growth in clean-label taste solutions.
Bakery delivered strong growth with authentic taste solutions to
customers broadening their ranges across both sweet and savoury
applications, particularly in South East Asia. The Group continued
to make good progress in expanding its capacity and deploying
technology capabilities in the region, and we moved into our new
Technology & Innovation centre in Shanghai.
Consumer Foods
-- Volume decline of 4.8% (2.8% volume growth excluding contract exit)
-- Estimated positive impact in the quarter from COVID-19 of circa 1.5%
-- Pricing of 2.1% reflective of increases in input costs and market pricing
-- Trading profit margin +10bps with efficiencies being largely offset by pricing
The division delivered a solid underlying performance in the
period excluding the impact of the previously reported ready meals
contract exit. There was a positive impact in March of circa 1.5%
from consumer stockpiling in some categories when lockdown measures
were introduced.
The Richmond chilled sausage range delivered a solid performance
and the recently launched meat-free ranges under the Naked Glory
and Richmond brands performed very well in the period. Kerry's
spreadable butter range including Dairygold benefitted from the
uplift in consumer demand in March. Performance in chilled ready
meals was impacted by softer category demand, while the frozen
range delivered good growth. The Food-to-go range delivered a
strong performance, with good growth in Cheestrings and Fridge
Raiders, while Oakhouse experienced a surge in demand across the
range of home delivery meals.
Financial Review
The Group has a very strong balance sheet with net debt at the
end of March of EUR1.9 billion with an average maturity period of
5.7 years, and committed undrawn facilities of EUR1.1 billion. As
announced on 18 February, the Group has proposed a final dividend
of 55.1 cent per share for approval at the Annual General
Meeting.
COVID-19 Impact and Actions
Across the globe, Kerry teams have taken on challenges to ensure
the safety of all our employees and continued support for customers
to ensure the global food supply chain remains intact for
consumers. Throughout this turbulent time, we continue to follow
all World Health Organisation and local authority guidelines, and
our actions have been focussed on our three main priorities;
-- Safeguarding the health and wellbeing of our employees:
home-working, zoning, segregation and use of protective equipment
across our global footprint of 150 manufacturing plants
-- Ensuring continuity of supply for our customers: setting
production records in a number of categories experiencing high
consumer demand, supporting customers with insights and adapting
their offerings to address changing consumer demands and providing
them PPE and sanitiser, with Kerry's specialised nutritional
ingredients being used to produce a component of COVID-19 testing
kits
-- Supporting our local communities: Producing hand sanitiser
across a number of our facilities, donating food, PPE and sanitiser
to front-line staff, and through the MyCommunity Initiative,
pledging 26,000 volunteer days and a EUR1 million fund to support
local community initiatives
During March, the restrictions on mobility significantly
impacted demand in the foodservice channel, while the retail
channel experienced increased demand in places. We are working on a
number of actions to minimise the cost impacts of reduced volumes,
including the suspension of all non-essential and discretionary
expenditure and targeted short-term cost management initiatives in
impacted business areas.
Future Prospects
Since we provided our FY 2020 guidance in February, the COVID-19
pandemic has escalated significantly and impacted businesses
throughout the world. Due to the resulting global uncertainty in
relation to the timeframe and business impact from the pandemic, we
are withdrawing our full year guidance.
The Group is focussed on managing through the short term
challenges to emerge as an even stronger customer partner. Our
Taste & Nutrition business continues to have strong growth
prospects, while navigating the short term challenges with agility.
The foodservice channel will continue to be impacted while
restrictions in movement are in place. We are focussed on
opportunities in more resilient areas of the foodservice channel
and planning with customers on menu developments for later in the
year. The retail channel continues to deliver good growth, as
Kerry's co-creation model and leading solutions offering are
enabling customers to react at speed through this period of
volatility. We have a good innovation pipeline to drive growth once
we emerge from this current unprecedented situation. Our Consumer
Foods business continues to see changes in consumer purchasing
behaviour during the period of restrictions, which is driving
significant volatility across categories. We will continue to
invest for growth and pursue M&A opportunities aligned to our
strategic growth priorities.
Kerry's unique business model, broad taste and nutrition
portfolio and industry leading integrated solutions capabilities
are more critical now than ever before, as we support our customers
to navigate the short-term disruption and embrace the challenges
and opportunities in addressing the evolving consumer demands
across the globe. Our Purpose to Inspire Food & Nourish Life
continues to guide us on this journey, and we remain focussed on
fulfilling our role as our customers' most valued partner.
This announcement contains inside information.
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
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTURVVRRUUSORR
(END) Dow Jones Newswires
April 30, 2020 02:00 ET (06:00 GMT)
Kerry (LSE:KYGA)
Historical Stock Chart
From Jun 2024 to Jul 2024
Kerry (LSE:KYGA)
Historical Stock Chart
From Jul 2023 to Jul 2024