Kerry First-Half Revenue Reflects Sales Growth in Ingredients, Flavors

Kerry Group PLC’s half-year revenue jumped to €2.9 billion, reflecting underlying sales growth of 3.2%, marked by 11.7% sales growth in ingredients and flavors and 7.8% growth in consumer foods.


• Group revenue of €2.9 billion

• Continuing volume growth +2.7%; Pricing +0.6%

• Trading profit increased by 3.0% to €275m

• Group trading margin up 50 basis points (bps) to 9.5%

• Ingredients & Flavors +60 bps to 11.7%

• Consumer Foods +10 bps to 7.8%

• Interim dividend per share increased by 12.5% to 13.5 cent

• Adjusted* EPS up 5.8% to 115.2 cent

• Earnings guidance for full year reaffirmed

View a portion of the earnings release below, or click here to view the full release.

Commenting on the results Kerry Group Chief Executive Stan McCarthy said; “We are pleased to report a solid group-wide performance in H1 2014 with good underlying sales growth and margin improvement. Notwithstanding significant adverse currency movements, adjusted earnings per share increased by 5.8% to 115.2 cent. Our Kerry Global Technology & Innovation Centers continue to drive industry-leading innovation. We remain confident of delivering 6% to 10% growth in adjusted earnings per share in 2014 as previously guided.”

Kerry Group achieved a solid financial and operational performance in the first half of 2014 despite significant headwinds including adverse currency movements particularly in developing markets. In addition, developed markets remained relatively subdued with consumer spending impacted by macro-economic conditions. Nevertheless, Kerry maintained a good business performance outperforming category and market growth rates − winning a strong pipeline of new product development projects and briefs from major global and regional food and beverage accounts. Recent major investments in Kerry Global Technology & Innovation Centers continue to drive industry-leading innovations and is a key differentiator in the marketplace. The Group also continues to successfully deploy Kerry’s taste and nutrition platforms throughout regional developing markets. Despite relatively weaker economic conditions in some regional developing markets and political instability in some zones, Kerry continues to record solid growth − in particular through nutritional applications in Asia.

Conditions in the Group’s primary consumer foods markets in the UK and Ireland remain highly competitive due to increased market fragmentation arising from consumer trends flavoring convenience formats, discounter channels and e-tailing. Whilst consumers continue to pursue value offerings, Kerry Foods’ priority brands performed well in the UK market and maintained brand positioning in the Irish market.


Group revenue at €2.9 billion reflects underlying sales growth (USG) of 3.2%. Revenues on a reported basis were 1.9% lower reflecting the adverse translation impact of currency movements relative to H1 2013. Continuing business volumes grew by 2.7% and pricing increased by 0.6% in a relatively benign input cost inflationary environment.

Volume growth and trading performance in ingredients & flavours markets improved in Q2 relative to Q1. Continuing business volumes increased by 4.2% and net pricing increased by 0.6%. Kerry Foods continues to reconfigure its business model for sustained profitable growth in line with Group metrics. Divisional continuing volumes reduced by 1.2% and net pricing increased slightly by 0.2%. Group trading profit increased by 3% on a reported basis to €275m reflecting 7.1% like-for-like (LFL) growth.

Business efficiency improvements through the Group’s 1 Kerry Business Transformation Program and improved product mix contributed a 50 basis points improvement in the Group trading profit margin to 9.5%. This reflects a 60 basis points improvement in trading margin in ingredients & flavors to 11.7% and 10 basis points improvement in Kerry Foods’ margin to 7.8%. Adjusted earnings after tax increased by 5.9% to €203m. Adjusted earnings per share increased by 5.8% to 115.2 cent (H1 2013: 108.9 cent). Basic earnings per share increased from 66.8 cent to 110.8 cent. The interim dividend of 13.5 cent represents an increase of 12.5% over the 2013 interim dividend.

In a comparatively weak overall marketplace, Kerry’s taste & nutrition platforms outperformed market growth rates in all regions. Functional ingredients & actives recorded strong growth in particular in nutrition sectors. Growth continued to accelerate in developing markets despite economic impacts of significant negative currency movements. Sales revenue reported at €2.1 billion reflects underlying sales growth of 4.7%. Continuing business volumes increased by 4.2% and pricing increased by 0.6%. Trading profits grew by 4.9% to €251m and the division’s trading margin increased by 60 basis points to 11.7%. Americas Region Demand for clean-label solutions, low-calorie, low-sodium, nutritional/health offerings and snacking options continued to drive development across American markets. Kerry technologies continued to win significant new briefs in all industry segments. Revenue reported at €915m reflects underlying sales growth of 4.7%.

Continuing business volumes grew by 4.3% and pricing increased by 0.6%. Beverage systems & flavors maintained a strong performance benefiting from health and convenience trends.

Beverage flavors recorded solid growth in all segments. Soft drinks provided good development opportunities particularly for low and mid-calorie variants. Growth in the nutritional sector benefited from Kerry’s aseptic technologies. Solid growth was recorded through food service chains. The Big Train branded beverage portfolio saw good growth in all geographic markets in particular Latin America. Savory, Dairy & Culinary systems & flavors had a mixed performance due to industry sectoral market conditions. Good growth was achieved through clean-label solutions in North America. Latin American markets, in particular in Central America and the Andean region, provided encouraging growth opportunities for culinary technologies leveraging Kerry’s insights and capabilities.

In North America performance in the culinary sector was assisted by Wynnstarr Flavors acquired prior to year-end 2013. Cereal & Sweet technologies performed well despite industry challenges. Excellent progress was reported in the bakery sector through Kerry’s clean-label technologies. Satisfactory growth was achieved in the cereals sector particularly in snacking and nutritional segments. Pharma ingredients continued to achieve solid market development with double digit growth through cell nutrition in biotechnology and pharmaceutical applications. EMEA Region Further progress was achieved in realignment of business structures and customer service capabilities in EMEA markets in line with 1 Kerry business models. Consumer spend in regional developed markets remains constrained, impacting industry development. While Kerry continued to successfully expand its footprint in EMEA developing markets, trading proved more challenging due to currency related inflationary pressures and political unrest in some zones.

Reported revenues at €791m reflect underlying sales growth of 1.3%. Continuing business volumes grew by 0.9% and pricing increased by 0.4%. Construction of the Kerry Global Technology & Innovation Centre in Ireland to serve EMEA customers is well advanced and on schedule to be operational in early 2015. In May, the Group opened a new Regional Development & Application Centre in Durban, South Africa to serve Kerry’s expanding global, regional and local customer base in Sub Saharan Africa.

Dairy & Culinary systems & flavors performed well relative to H1 2013 particularly through food service and snack applications. Development in the European meat industry again proved challenging but Savory systems recorded good growth through coatings and seasonings in Russia. Sweet systems performed satisfactorily overall but growth in South African markets was back due to relatively weaker market conditions and intense competition. Cereal technologies achieved sustained growth in the snack and nutrition sectors. Beverage systems & flavors maintained a solid development momentum with leading beverage and food service accounts. Kerry’s branded Da Vinci and Big Train ranges continued to grow throughout European food service channels.

Nutritional ingredients & actives and delivery systems recorded excellent growth particularly in developing markets. Kerry hydrolyzed proteins grew through wider nutritional applications. Primary Dairy market price returns weakened considerably in Q2 due to significant growth in output and export volumes in key exporting countries.

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