TIDMKYGA
RNS Number : 0416X
Kerry Group PLC
29 April 2021
Date: 29 April 2021
KERRY GROUP
Q1 INTERIM MANAGEMENT STATEMENT 2021
Good business momentum through the first quarter
Kerry, the global taste & nutrition and consumer foods
group, reports business performance for the first quarter ended 31
March 2021. This statement is issued in conjunction with the
Group's Annual General Meeting which is being held today.
OVERVIEW
* Business volume growth 1.9%
* Taste & Nutrition 2.0%
* Consumer Foods 1.0%
* Pricing 0.5%
* Group trading margin (50bps)
* Full year EPS guidance issued
Edmond Scanlon, Chief Executive Officer
"We saw significant variability and highly dynamic market conditions
right across our end use markets, channels and regions. Against this
backdrop, I am very pleased with the business momentum we saw as we
moved through the quarter. Our performance reflected sustained strong
growth in the retail channel, while the foodservice channel continued
to be impacted by increased restrictions in many local markets, before
returning to growth in March. APMEA delivered strong growth throughout
the period, Europe was impacted across the region, while the Americas
had a strong finish to the quarter.
The good business momentum has been supported by an increase in the
level of innovation in a number of key markets. This momentum combined
with an overall improvement in market conditions, gives us increased
confidence in the full year outlook, where we are expecting to achieve
strong volume growth and are guiding adjusted earnings per share growth
of 11 - 15% in constant currency."
Markets and Performance
Market conditions remain highly variable as differences in
recovery paths are emerging across regions. A number of countries
are seeing increased mobility, substantial reopening activity and
increased consumer confidence, while others continue to adapt to
changing local conditions. Against this backdrop, the needs of
customers and consumers continue to evolve at pace across our
marketplace.
Global markets have seen at-home consumption remain elevated
with an evolution in work practices and daily routines. The overall
recovery in the foodservice channel slowed in the period before
showing good signs of recovery as many countries advanced their
vaccine roll-out programmes. Prevailing trends include a demand for
health and immunity enhancement, plant protein options, and
products addressing a diverse range of sustainability criteria.
In the period the Group had business volume growth of 1.9%, a
pricing increase of 0.5%, an adverse transaction currency impact of
0.2%, contribution from business acquisitions of 1.0%, and an
adverse translation currency impact of 6.7%, resulting in a
reported revenue decrease of 3.5%. Group trading margin decreased
by 50bps, reflecting ongoing COVID-related costs and an adverse
foreign exchange impact.
Business Reviews
Taste & Nutrition
Good growth in retail channel, with foodservice returning to
growth by the end of the quarter
> Overall volume growth of 2.0% driven by performance in APMEA
> Retail channel delivered 5.9% growth - led by Beverage, Snacks and Meals EUMs
> Foodservice channel volumes declined 8.2% - good
performance against backdrop of increased restrictions and a return
to overall growth in March
> Pricing of 0.5% reflecting increased input costs
> Trading margin decrease of 50bps principally driven by net COVID -- related costs
Taste & Nutrition continued its overall recovery trajectory,
led by performance in APMEA. The Americas began with a slow start
but finished strongly, while Europe remained challenged due to the
level of restrictions in place across the first quarter. In the
period we saw an increased level of local innovation, with a number
of launches incorporating Kerry's proactive nutrition portfolio,
helping our customers enhance their plant-based product ranges, and
significant engagement with customers supporting initiatives right
across the sustainable nutrition spectrum.
Business volumes in developing markets increased by 10.7% led by
strong performances in China and Brazil, while overall volumes in
developed markets decreased due to the impact of restrictions on
the foodservice channel.
Americas Region
> Overall volume growth of 0.4% with a strong finish to the period
> Retail channel delivered good growth led by Beverage, Snacks and Meals EUMs
> Foodservice performance impacted earlier in the period before a return to growth in March
Within the North American retail channel, Kerry's Beverage EUM
achieved very strong growth with increased demand for proactive
nutrition, wins with taste systems and natural extracts, and a
number of launches in plant-based beverages. Snacks delivered very
good growth through new savoury taste systems and healthier
snacking, while growth in the Meals EUM was supported by culinary
taste systems and health & wellness meals incorporating Kerry's
proactive nutrition portfolio. The foodservice channel was impacted
by restrictions earlier in the period before a return to growth in
March, supported by increased activity right across quick service
restaurants, fast casual and casual dining. The Group also
progressed the development of its new manufacturing facility in
Rome, Georgia in the period.
In LATAM, Brazil delivered strong growth, driven by performance
in Beverage and ice cream within the retail channel, while Mexico
returned to growth and CACAR remained challenged.
The global Pharma EUM delivered good growth, with excipients and
Kerry's Wellmune immunity enhancing technology performing well.
Europe Region
> Overall volume reduction of 2.4%, as recovery trajectory was impacted by restrictions
> Retail channel delivered overall growth led by Meat and Dairy EUMs
> Foodservice channel performance impacted by increased restrictions
The region delivered overall growth in the retail channel
against strong prior year comparatives. This was led by a very
strong performance in Kerry's Meat EUM, with significant new launch
activity in meat-free categories and good growth in meat systems.
Growth in the Dairy EUM in the region was led by innovations within
ice cream. In the period, the foodservice channel saw dine-in
restaurants in many markets closed or operating at reduced capacity
as a result of increased restrictions across the region.
Russia and Eastern Europe delivered a good performance, led by
Snacks and Meat EUMs. In the period the Group announced its
intention to acquire the Spanish company Biosearch Life. This
acquisition is expected to finalise in the second quarter of the
year.
APMEA Region
> Volume growth of 11.7% led by performance in China
> Retail channel delivered strong growth driven by Beverage, Snacks and Bakery EUMs
> Foodservice channel achieved overall growth in the quarter
Overall growth in the region was driven by performances in
China, the Middle East and Australia, while South East Asia
continued to be impacted by ongoing restrictions. In the retail
channel, excellent growth was achieved in the Beverage EUM across
tea, coffee and refreshing beverage. The Snacks and Bakery EUMs
also delivered very strong growth through performance with regional
leaders. Growth in the foodservice channel was led by Beverage and
Meals EUMs, supported by increased LTO activity and a number of new
launches.
The Group made good progress in the development of its new taste
facility in Durban, which will be commissioned later this year. The
construction of a new taste manufacturing facility in Indonesia was
also announced, catering for a wide range of technologies. This
facility will include a new RD&A centre and is expected to be
operational by the end of 2022.
Consumer Foods
Strong underlying volume growth
> Volume growth of 1.0% - led by strong growth in meat snacking
> Pricing of 0.4% reflecting increases in input costs
> Trading margin +20bps primarily due to enhanced product mix
Growth in the division reflected a strong underlying performance
given an estimated 3% customer stocking benefit in the previous
quarter. This was driven by strong growth in snacking primarily
through the Fridge Raiders range, with Cheestrings delivering a
solid performance given school closures, while Oakhouse Foods
continued to have excellent growth in the period.
Richmond had a good performance across the meat sausage range,
while Kerry's plant-based meat-free ranges continued to achieve
excellent growth supported by strong innovation and new launch
activity. Spreadable butter performed well, while sliced meats were
impacted by reduced deli counter operations. Volumes in frozen
meals were initially affected by customer stocking in the previous
quarter, before delivering a strong finish to the period. Chilled
meals achieved strong growth throughout, supported by health &
wellness and plant-based launches.
Financial Review
At the end of March net debt decreased slightly to EUR1.9
billion. The Group's consolidated balance sheet remains strong
which will facilitate the continued organic and acquisitive growth
of Group businesses. As announced on 16 February, the Group has
proposed a final dividend of 60.6 cent per share for approval at
the Annual General Meeting.
Board Changes
The Board has approved the appointment of Mr. Michael Kerr as a
non-Executive Director with effect from 3 May 2021. Michael has
over 36 years of investment management experience having recently
retired after a long and successful career with Capital Group, one
of the world's oldest and largest investment management
organisations. He will bring to the Board a detailed knowledge of
the global equity capital markets, extensive business leadership
skills and insights into the North American market.
Ms. Joan Garahy, having served as a Director for nine years,
will retire from the Board of Directors effective from the
conclusion of the Annual General Meeting to be held later today.
Joan will be succeeded by Dr. Hugh Brady as Senior Independent
Director and by Mr. Tom Moran as Chair of the Remuneration
Committee with effect from 29 April 2021.
Future Prospects
Within Taste & Nutrition, we see strong growth prospects in
the retail channel, with continued recovery in foodservice,
underpinned by a very good innovation pipeline and strong customer
engagement. Our Consumer Foods business has a good growth outlook
supported by continued innovation and the strength of our
brands.
We will continue to invest for growth and enablement of our
business model, while continuing to pursue M&A opportunities
aligned to our strategic growth priorities. The strategic review of
our dairy-related businesses in Ireland and the UK is ongoing.
The Group expects to deliver strong volume growth and adjusted
earnings per share growth in 2021 of 11% to 15% 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 Company undertakes no obligation to publicly update any forward
looking statement, whether as a result of new information, future
events or otherwise.
CONTACT INFORMATION
=============================================
Media
Catherine Keogh , Chief Corporate
Affairs Officer
+353 45 930188 | corpaffairs@kerry.com
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
Website
www.kerrygroup.com
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END
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