Kerry raises annual earnings guidance, highlighting growth in snacks, beverages, meat and bakery in Q3

27 Oct 2022 --- In Kerry’s review of its third quarter results, the company underscores that consumer demand continued to be strong through the period despite geopolitical volatility and inflationary headwinds. Consumer preferences for new taste experiences, clean labels and healthier options remain prevalent, while the importance of value options continues to rise across categories.

Revenue increased by 16.1% in the period, comprising volume growth of 6.6%, increased pricing of 10.6%, with the contribution from business acquisitions of 4.8% partially offset by the impact of the business disposal of the Consumer Foods Meats and Meals business of 12.7%.

“Our volume growth was broad based across our regions, channels and markets, led by excellent performances in Snacks, Beverage, Meat and Bakery in particular,” comments Edmond Scanlon, Kerry CEO. “We also made good strategic progress with further footprint expansion and strategic acquisitions.”

“While we recognize the current level of uncertainty in the marketplace, we feel very well positioned as we continue to support our customers in addressing the various market challenges and opportunities. Given we have now reported the third quarter, we are updating our full year earnings guidance of 6% to 8% growth on a constant currency basis.”

Group EBITDA margin decreased by 40 bps, primarily driven by the significant impact of passing through input cost inflation, partially offset by accretion from portfolio developments, operating leverage, portfolio mix and efficiency initiatives.

Given the evolving consumer landscape, the company reports its customers are continuing to evaluate the relevance and uniqueness of their offering and the need to adapt and expand their product ranges. Against this market backdrop, it says “the level of innovation remains strong.”

Taste & Nutrition segment performance
Kerry’s Taste & Nutrition division reportedly delivered strong volume growth through the period across all regions, despite the effect of increased pricing.

Business volumes in emerging markets increased by 12.3%, as strong growth in LATAM, the Middle East, and Southeast Asia was partially offset by challenging conditions in China.The foodservice channel continued its momentum with strong double-digit volume growth. This growth was underpinned by increased limited time offerings and seasonal offerings, combined with solutions to reduce operational complexity.

The retail channel also continued to deliver growth with customers looking for increased innovation and renovation to offer new taste experiences within categories, as well as reducing food waste and providing more value options to consumers.

The growth achieved across Kerry’s F&B EUMs was supported by the overall performance of its key growth platforms, with Tastesense salt and sugar reduction technologies deployed across a number of savory and dairy applications. Plant-based performed well in spite of a slowdown within the category.

Demand continued to be strong for Kerry’s range of food waste solutions, while proactive health performed in line with expectations given the elevated demand in the prior year.

Business volumes in emerging markets increased by 12.3%, as strong growth in LATAM, the Middle East, and Southeast Asia was partially offset by challenging conditions in China.

Volume growth in the Americas
Kerry reported continued business volume growth of 9.3% across regions, channels and end use markets in the Americas region. The company’s Beverage, Meat and Bakery businesses led this performance.

Within Beverage, growth was driven by increased launches in the tea & coffee, refreshing and nutritional beverage categories. 

Growth in Meat was delivered through increased demand for taste systems and Kerry’s range of food protection and preservation solutions, while Bakery saw growth driven by functional solutions and texture systems.

Growth in foodservice remained strong with quick service restaurants in particular, due to increased seasonal menu offerings, further menu development and innovations enhancing back of house efficiency.

Within LATAM, Brazil and Mexico delivered very strong growth. Volume growth in Brazil was driven by performance in Meals and Meat, while volumes in Mexico were led by growth in Beverage and Snacks with “strong wins” in authentic taste.

Europe Region
Kerry’s European business saw overall volume growth of 6.2% with Q3 growth of 4.4%. This was led by Snacks, Dairy and Meals categories.

Snacks achieved strong growth with Kerry’s Tastesense salt reduction technology portfolio, driven by increased customer focus on enhancing their products’ nutritional profiles. Growth in Dairy was strong, supported by new launches in ice cream and dairy alternative innovations in the foodservice channel. Kerry’s Irish dairy business recorded “solid growth” of 1.8%, while managing significant price inflation.

Meals achieved good growth through taste systems and functional solutions while growth in Beverage was driven by sales of products incorporating Kerry’s botanicals, natural extracts and sugar reduction technologies.

The strong overall volume growth in the region was led by the foodservice channel supported by new menu innovations, and an increased level of seasonal products.

From a geographical perspective growth was strongest in Central and Southern Europe, while performance in Eastern Europe was impacted by the ongoing war in the region. As previously announced, the divestment of the Group’s Russian subsidiary was also completed during the period.

APMEA Region
In the APMEA region, overall volume growth of 9% was observed with continued strong Q3 growth of 8.6%. This was led by Snacks, Meat and Bakery markets.

Growth in the region was primarily driven by very strong performances in the Middle East and Southeast Asia, led by excellent growth in foodservice as well as Snacks and Bakery within the retail channel. In China, performance was constrained by localized restrictions which continued to be a feature throughout the period.

Dairy Ireland
Kerry’s Irish dairy business recorded “solid growth” of 1.8%, with a Q3 performance of 1%, while managing significant price inflation. Pricing of 36.6% reflected significant increases in dairy prices and other input costs.

Dairy Ingredients delivered volume growth while prices remained significantly higher as a result of constrained global supply dynamics.

Edited by Benjamin Ferrer