Kerry reports 4.5 percent revenue lift in Q3

08 Nov 2017 --- Global taste & nutrition and consumer foods group, Kerry, has reported its Q3 results. In the nine months to September 30, 2017 business volumes on a group-wide basis increased by 4.2 percent. Pricing increased by 2 percent against a background of approximately 4 percent higher raw material costs. Reported revenues increased by 4.5 percent reflecting the strong business volume growth, increased pricing, adverse currency translation impact of 1.9 percent, adverse currency transaction impact of 0.3 percent and the effect of acquisitions net of disposals of 0.5 percent.  

The group has maintained a strong business momentum in Q3 2017, delivering good volume growth ahead of category growth rates, driven by successful innovation in response to consumer health and wellness trends. The continuing positive momentum reflects the adaptability and agility of Kerry’s Business Model in meeting customer requirements across multiple end-use-markets and broadening diverse market channels.

Kerry Group Chief Executive Edmond Scanlon says: “The Kerry Business Model continues to deliver speedy innovation in response to the pace of change in the food and beverage industry. We achieved good volume growth in the first nine months of 2017 and for the full year, taking into account the 4 percent currency translation headwind, we expect to achieve growth in adjusted earnings per share of 4 percent to 6 percent on a reported basis to a range of 336 to 343 cent per share.” 

Business performance 
Nutritional labeling requirements and demand for clean label, free-from, meat-free, natural, tasteful food and beverage offerings remain a strong positive catalyst for differentiated product development. Investment in pioneering technologies, assisted by Kerry’s Innovation Centre network and “in-market” Development & Application Centres, continues to provide significant growth opportunities through the Group’s global, regional and local customer alliances across developed and developing markets. In particular, growth across foodservice, convenience and e-tail channels in all regions continues to present solid innovation platforms for growth and market development.   

Taste & Nutrition Technologies and Systems delivered good growth in North America, a solid performance in Latin America, good growth in the EMEA region and continued double-digit growth in Asia.  

Despite increasing inflationary pressures in the UK consumer foods market, Kerry Foods maintained good volume growth – benefiting in particular from increased snacking trends in dairy and meat categories.   
  
Consumer foods 
The group’s consumer foods business performed well against a background of increasing inflationary pressures in the UK market, sterling volatility following the UK electorate decision to leave the EU, and increased market fragmentation with the continued expansion of discounter retail chains. In the nine months to the end of September, business volumes grew by 2.5 percent. With a continuing focus on significant raw material price inflation recovery, pricing increased by 1.9 percent. The divisional trading profit margin decreased by 70 basis points as the underlying business margin improvement was offset by adverse sterling exchange rate movements.  

Double-digit growth was achieved in the UK market through branded meat and dairy snacking lines including Fridge Raiders and Cheestrings. Cheestrings also continued to extend its market positioning in mainland Europe. The UK sausage category proved challenging where the relaunch of Richmond assisted brand share. The cooked meats category in the UK and Ireland also proved highly competitive. Kerry Foods meal solutions lines maintained a good performance. In the chilled sector, good growth was achieved through ethnic meals and the foodservice channel provided encouraging prospects for frozen meals. Good growth was achieved through butter-based spreads in the UK private label spreads category and Dairygold maintained brand share in the Irish market.

As recently announced, the group completed the acquisition of Ganeden –  a leading technology innovation company focused on patented probiotics and related technologies. 

In October, the group also acquired Mississippi, US-based Dottley Spice, a leading supplier of seasonings and coatings to the meat processing industry and foodservice sector in North America.  

An agreement has also been reached to acquire the US-based Kettle business of Tyson Foods, a leading provider of culinary systems and custom solutions to the foodservice channel in North America. Operating from a production and development facility in Fort Worth, Texas; the Kettle business has a strong heritage in the fast-growing foodservice industry and well established key national customer alliances in particular in the QSR and casual restaurant sectors. The transaction which is subject to regulatory approval is expected to be completed by year-end.