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Underlying Growth for Kerry Group

04 March 2015

IRELAND - Irish based multi-national food and ingredients group, Kerry Group, achieved a year of good underlying growth and sustained business margin expansion in 2014.

The company said that despite a challenging macro-economic landscape and the impact of geopolitical issues, particularly in developing markets, the Group continued to successfully develop across its three strategic pillars – Taste, Nutrition and Developing Markets.

It said that changing consumer demographics and shopping behaviour are driving a paradigm shift in food and beverage consumption trends, impacting industry, retail and foodservice developments.

“In particular increased urbanisation, millennial growth and life-stage requirements continue to increase demands for innovation to meet convenience, snacking, functionality and health / wellness trends,” said Chairman Michael Dowling.

“Demand for clean-label, enhanced nutrition, natural, ‘free-from’ – in particular gluten-free offerings, and wider flavour profiles continued to provide solid growth opportunities for Kerry’s leading taste, nutritional and functional ingredients and actives technology platforms.

“Partnerships with the Group’s global and regional customers were further advanced – benefiting from the Group’s 1 Kerry capabilities and expertise provided by Kerry Global Technology and Innovation Centre and Regional Development and Application Centre developments.”

He added: “While showing early signs of recovery, increased fragmentation and polarisation in the Irish and UK consumer foods markets contributed to increased competitiveness. Kerry Foods performed satisfactorily against this background whilst continuing to progress its business repositioning strategies.”

In 2014 Group businesses grew ahead of its markets delivering 2.4 per cent continuing business volume growth.

Pricing decreased by 0.5 per cent. Group sales revenue at €5.8 billion on a reported basis was 1.4 per cent lower, reflecting the adverse translation impact of currency movements, acquisitions net of disposals and business rationalisation volume loss.

Despite weaker overall market conditions and lower industry inventory levels, Kerry’s ingredients and flavours businesses achieved good volume growth and a strong trading performance.

Continuing business volumes increased by 3.4 per cent and net pricing declined by 0.5 per cent.

Kerry Foods continued to successfully progress its business repositioning, with continuing business volumes reduced by 0.7 per cent and net pricing 0.6 per cent lower.

The Group’s trading performance maintained a strong positive momentum benefiting from Group-wide business operational improvements due to the 1 Kerry Business Transformation Programme and portfolio repositioning in Kerry Foods.

Group trading profit increased by 4.1 per cent to €636m reflecting 5.3 per cent like-for-like [LFL] growth. The Group trading profit margin increased by 60 basis points to 11.1 per cent.

This reflects an 80 basis points improvement in trading margin in ingredients and flavours to 13.7 per cent and a 30 basis points improvement in Kerry Foods’ margin to 8.3 per cent, the company said.

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