Kerry results: “Mindful” eating helps revenues top €6.4bn in 2017

In its preliminary statement of results for the year to December 31, 2017, Kerry said that the growth in business volume is down to the Group’s technology capabilities and speed of innovation that keeps pace with consumers and customer requirements.

“Kerry Group delivered strong top-line growth and sustained business development in 2017,” said Group Chief Executive Edmond Scanlon.

“Adjusted earnings per share increased by 5.5 percent, reflecting 9.4 percent growth over the prior year on a constant currency basis. In 2018, we expect to deliver adjusted earnings per share growth of 6 percent to 10 percent on a constant currency basis.”

The company said that “mindful” consumption has increased demand for speedy innovation, as the marketplace aligns to consumer trends favoring enhanced taste profiles, premiumization, clean label, “free-from,” personalized, convenient, sustainably sourced food and beverage offerings.

Taste & nutrition
Volume growth increased by almost five percent year-on-year to €5.2bn (US$6.4bn), in Kerry’s Taste and Nutrition business, while the Group’s consumer foods business recorded revenue of €1.3bn (US$1.6bn), which is a 2.4 percent increase in volume growth compared to its 2016 performance. Trading profit was €781m (US$965m), a year-on-year increase of 4.2 percent and the Group’s trading margin was maintained at 12.2 percent.

Throughout last year Kerry completed a total of eight acquisition costing €397m (US$490m).

Impact of Brexit
While the exact outcome of the UK’s exit from the European Union is still unclear, Kerry says its Business Brexit teams continue to work through the potential implications for the group.

Sterling mitigation plans are well progressed, as the group continues to restructure less profitable businesses, execute the KerryExcel cost optimization program and reduce transaction currency exposure.

“Given our well-established manufacturing footprint in the UK and the Eurozone, we are very well positioned to deal with the potential challenges and realize the opportunities that will arise,” the company says.

Board & management changes
The group also announces its intention to appoint Marguerite Larkin as Chief Financial Officer from September. She will succeed Brian Mehigan who will take up the role of Chief Strategy Officer.

Larkin is a senior partner with Deloitte and has held some leadership roles within Deloitte Ireland, including Audit & Assurance and Risk Advisory leader, Head of Consumer Business Industry Practice and Client & Industries Partner. She has more than 25 years global experience and has served as lead client partner for a number of the firm’s largest clients operating in a broad range of industries, including food & beverage, pharma and technology.

Outlook
On its prospects, the group says that despite the changing market landscape and significant currency volatility, Kerry businesses are well positioned to continue to grow and develop profitability and to achieve the group’s new medium-term strategic financial targets, as presented at its Capital Markets Day in October 2017.

The Group expects its targets to be delivered through above industry average volume growth and continued business margin expansion.

Building on Kerry’s breadth and depth of foundational technologies and geographic footprint, Kerry Taste & Nutrition is well placed to deliver the continued organic growth of the business across developed and developing markets.

In the European consumer foods markets, building on Kerry Foods’ deep consumer insight and core dairy, meals and meat technologies, the business will continue to focus on its "strategic value creation model" through occasion led propositions in response to consumer, customer and channel requirements.

The Group also says that it is in a strong position to continue to invest in the organic growth of its global businesses and to lead the continued consolidation of the industry benefiting from the group’s strong balance sheet and scalable business model.

In 2018, the Group expects to deliver adjusted earnings per share growth of 6 percent to 10 percent on a constant currency basis.

Health & wellness demands
The global marketplace continues to change at an “unrelenting pace” says Kerry, driven by health & wellness demands, convenience trends, channel proliferation and in particular the growth of out-of-home food and beverage consumption, with the continued blurring of the landscape between food retail and food-to-go.

Nutritional labeling requirements and regulatory changes also continue to drive demand for clean label offerings across all end-use-markets provide significant opportunities for differentiated product development.

In 2017, the adaptability and agility of the Kerry Business Model proved highly effective across the increasingly fragmented marketplace through multiple retail, foodservice and e-commerce channels.

The Group’s focus on profitable growth was further assisted by technology investment and industry-leading RD&A expenditure in Taste & Nutrition. Taste & Nutrition Technologies and Systems achieved sustained volume growth in North America, a good performance in Latin America, a solid recovery in the EMEA region and continued double-digit growth in Asia.

In the group’s UK and Irish consumer foods markets, while Kerry Foods maintained a strong category and business development focus, benefiting in particular from the increased snacking and "food-to-go" consumption trends, the underlying satisfactory divisional business performance was impacted by adverse sterling exchange rate movements.