Ingredients company Kerry Group has released its Q3 Interim Management Statement 2023, reporting a volume growth of 1.6%.
Group reported revenue in the first nine months of the year decreased by 4.2%, reflecting business volume growth of 0.4%, pricing of 1.3% and a contribution from acquisitions of 1.1%, more than offset by the effect of disposals of 5.1% and adverse translation currency of 1.9%.
The company’s EBITDA margin increased by 10 basis points (bps) as benefits from cost efficiency initiatives and portfolio developments were partially offset by the mathematical impact of passing through overall input cost inflation.
Kerry highlighted that customer innovation activity primarily focused on new taste profiles, continued improvements to products’ nutritional characteristics, products targeting health need states, and providing more relative value options for consumers.
Kerry Group CEO Edmond Scanlon said: “We delivered a good overall performance in the period recognising varying conditions across our markets. North America saw good improvement through the third quarter, Europe performed in line with expectations while APMEA continued to deliver strong growth. Our unique positioning in foodservice supported our continued strong growth in the channel.
“We made good strategic progress through the period with further footprint expansion and strategic acquisitions, and given the Group’s strong balance sheet and cash flow, we are also initiating a share buyback programme.
“Taste and Nutrition remains strongly positioned for volume growth and margin expansion while recognising current market conditions, however Dairy Ireland performance continues to be impacted by challenging industry dynamics. Given this context, we expect our constant currency earnings growth to be at the low end of our guidance range.”
Taste & Nutrition
The Taste & Nutrition overall volume growth was 1.5%, with a Q3 growth of 1.6%. Its EBITDA margin was increased by 20bps, primarily reflecting benefits from cost efficiencies and portfolio developments, partially offset by the mathematical impact of passing through overall input cost inflation.
Overall volumes in the division reportedly remained solid considering customer and industry dynamics. Foodservice achieved high-single digit volume growth driven by ongoing innovation with QSRs and coffee chains on menu enhancement, seasonal products, and back-of-house efficiency solutions. Volumes in the retail channel were impacted by customer inventory management in North America.
Business volumes in emerging markets increased by 5.1% driven by strong growth in the Middle East.
Within the global Pharma EUM, performance was led by good volume growth in cell nutrition and excipients.
Europe region
The region achieved continued excellent growth of 2% for Q3 (3.7% overall) in the foodservice channel driven by seasonal products, new menu innovations and ongoing nutritional profile improvements. The retail channel delivered a solid performance in the region considering the significant consumer inflationary environment.
Growth in Meat was driven by culinary taste and texture system launches combined with continued nutritional enhancement innovations. Snacks delivered strong growth through savoury taste and Tastesense® salt reduction technologies, while Meals also achieved strong growth through nutritional enhancements and authentic taste solutions for stocks and broths.
Dairy Ireland
Volumes in Dairy Ireland were reportedly lower through Q3, down 12.1%, as input cost dynamics continued to impact overall market demand. Within Dairy Ingredients, volumes principally reflected softer market supply dynamics with prices continuing to reduce through the period, as its EBITDA margin was down 110bps.
Overall growth in Dairy Consumer Products was led by Kerry’s branded cheese ranges and private-label spreads.
Board changes
The Board has agreed to appoint Dr. Genevieve Berger and Professor Catherine Godson as non-executive directors of the Company with effect from 1st November 2023.
Dr. Berger is a global science leader and during her executive career held roles as the chief science officer at Firmenich International SA as well as the chief Research & Development officer and chief science officer at Unilever plc.
Berger is currently a non-executive director of Dassault Systèmes SE and previously served on the boards of Air Liquide SA, Astra Zeneca plc and Smith & Nephew plc.
Professor Godson is the associate Dean, Research and Innovation at University College Dublin (UCD) School of Medicine. She has an international reputation in scientific research gained during a long and successful academic career in the US, Switzerland and at UCD.
Godson has a broad knowledge across human health and is a global expert on diabetes as well as cardiovascular and kidney diseases. She currently serves on the Irish Research Council and as a Trustee of Barts Charity, London.
