Kerry has released its first quarter sales for 2023. The company reported revenue increased by 10.3% in the period. This comprised increased business volumes of 0.2%, increased pricing of 8.3%, favorable translation currency of 1.5% and contribution from business acquisitions net of disposals of 0.3%. Kerry EBITDA margin decreased by 70bps primarily driven by the mathematical impact of passing through input cost inflation, partially offset by the positive effect from cost efficiency initiatives.
Related: Kerry Releases Tastesense Sweet Organic as First Organic-certified Sweet Modulator
Report Highlights
At the end of the period, Kerry completed the sale of the trade and assets of its Sweet Ingredients portfolio to IRCA.
At the end of March, Kerry’s net debt of €1.7 billion reflected cash generation and proceeds from the disposal of the Sweet Ingredients Portfolio. Foreign exchange translation is currently expected to be a headwind of approximately 3% on earnings in the full year based on prevailing rates.
On February 16, 2023, Kerry proposed a final dividend of 73.4 cents per share for approval at the Annual General Meeting.
Edmond Scanlon, chief executive officer shared, “Our performance in the first quarter was driven by good volume growth in APMEA and Europe, led by strong growth in the foodservice channel, as customers in the North America retail channel worked through elevated inventory levels across the period. Overall growth was led by the Dairy, Snacks and Pharma markets, as customers continued to innovate their offerings while navigating the heightened inflationary environment. We continued to make good strategic progress through footprint expansion and portfolio evolution with the sale of our Sweet Ingredients Portfolio, further enhancing and developing our business in areas where we can add most value. While recognising the current market uncertainty, we believe we remain strongly positioned for growth and we reiterate our full year constant currency earnings guidance.”
Taste & Nutrition
According to Kerry, the Taste & Nutrition division delivered solid overall volume growth through the period despite the effect of increased pricing. Foodservice continued its momentum with strong volume growth, supported by innovation with quick service restaurants and coffee chains on new menu development, seasonal products and solutions to enhance back-of-house efficiency. Overall performance in the retail channel was muted in the period, reflecting customers’ inventory management in North America.
Growth in the period within the Food EUM was led by Dairy, Snacks and Meat, supported by continued innovation and strong performances in savory taste and Tastesense salt and sugar reduction technologies. Business volumes in emerging markets increased by 6.0% in the period, driven by strong growth in the Middle East, Southeast Asia and LATAM.
The global Pharma EUM achieved good volume growth, led by a strong performance in cell nutrition.
Americas Region
Performance in the region was impacted in the period by customer inventory reductions, particularly in the North American retail channel. Foodservice performed well with continued growth and business development in back-of-house efficiency solutions and seasonal menu offerings.
Within North America, growth in Beverage was driven by innovations incorporating Kerry’s botanicals, coffee extracts and Tastesense sugar reduction technologies. Dairy also performed well with Taste technologies across ice cream and dessert categories, while performance in Meat was driven by culinary taste, texture systems and clean smoke technologies.
Growth in LATAM was led by a strong performance in Mexico across Beverage and Snacks, while growth in Brazil was driven by performance in Meat and Beverage.
Europe Region
The region achieved another strong quarter of growth, while managing significant price inflation. Snacks delivered strong growth through savory taste systems and Tastesense™ salt reduction technologies. Growth in Dairy was supported by new innovations in ice cream and dairy applications in the food service channel, while Meals achieved good growth through taste technologies and functional solutions.
Growth was broad-based across the region with strong growth in the food service channel, particularly in quick-service restaurants and coffee chains, while the retail channel delivered a solid performance given the current inflationary environment.
APMEA Region
Growth in the region was primarily driven by strong performances in the Middle East and Southeast Asia, while China recovered through the period as market conditions improved.
Overall growth was strong across the Food EUM, particularly in the food service channel. Growth in Meat was driven by local authentic taste and texture solutions, while Meals and Dairy delivered strong growth through culinary and dairy taste systems. Performance in Bakery was supported by new launch activity and increased demand for functional systems with regional leaders.
During the period, good progress was made in expanding the Group’s capacity in the region, including the development of its new taste facility in Karawang, Indonesia.
Dairy Ireland
Overall volumes in the period in Dairy Ireland were lower and pricing was higher given the heightened year-on-year inflationary cost environment.
Dairy Ingredients volumes were impacted by high market prices and expectations of inflation turning to deflation, given global market supply and demand dynamics across the first quarter.
Dairy Consumer Products performed well in the period, with overall growth led by Kerry’s branded cheese ranges and private-label spreads, supported by increased promotional activity.
Looking Forward
According to Kerry, the company will continue to manage input cost fluctuations with its well-established pricing model and continue to invest capital and develop its portfolio aligned with its strategic priorities.
Kerry expects to achieve adjusted earnings per share growth in 2023 of 1% to 5% on a constant currency basis.
