Kerry expects to deliver 7% to 9% growth in adjusted earnings per share for the full year, it says after announcing its interim management statement for the nine months to September 30, 2014.
Highlights of the statement include a 2.4% increase in continuing business volumes and a Group trading margin up 60-basis points.
In the nine months to September 30, 2014, continuing business volumes on a Groupwide basis increased by 2.4%. Pricing decreased by 0.2% in a relatively benign input cost environment. Group revenues on a reported basis were 2% lower reflecting the adverse translation impact of currency movements, acquisitions net of disposals and business rationalisation volume of 1.6%.
In line with the business momentum reported at the half year stage, the Group’s trading margin performance continued to improve in the period. The Group trading profit margin increased by 60 basis points relative to the first nine months of 2013.
Despite industry de-stocking and lower inventory levels in many food and beverage industry sectors, Kerry achieved a 3.6% increase in continuing business volumes in Ingredients & Flavours in the nine months to end of September.
Americas Region continued to achieve good growth, in particular through all-natural, clean- label and nutritional solutions. Continuing business volumes increased by 3.6%. Performance in the North American meat business was solid benefiting from Kerry savoury technologies. While growth in the culinary sector was impacted by the challenges in the frozen food category, Kerry continued to benefit from the Wynnstarr Flavors acquisition completed prior to year-end 2013.
Beverage systems and flavours performed well through leading beverage and foodservice accounts. Dairy systems also saw good growth through foodservice channels. Primary dairy market price returns weakened further in Q3 due to a continuing increase in output in key exporting countries and a build-up of inventories in importing countries. Enzymes and hydrolysed proteins maintained satisfactory growth and nutritional ingredients and actives achieved strong growth in developing markets.
Against the backdrop of challenging retail and consumer trends in the Irish and UK markets, Kerry Foods performed satisfactorily and continued to successfully progress its business repositioning strategies. In the nine months to end of September, continuing business volumes declined by 1.2%. Pricing was marginally lower by 0.3%. The divisional trading profit margin improved by 20 basis points reflecting the ongoing business efficiency programmes and portfolio repositioning to-date.
UK Brands maintained a good performance. Richmond saw continued brand growth in the sausage sector. Mattesson’s Fridge Raiders recorded strong growth in the meat snacking sector. Cheestrings performance in Q3 was impacted by deep competitor promotional activity.
In UK customer branded segments, Kerry Foods achieved an improved performance in the third quarter compared to the H1 level of sales - in particular in the chilled ready meals sector. The frozen meals category remained challenging but Kerry Foods continues to outperform market conditions due to successful brand, channel and new business development.
In Ireland, discounters continue to grow market share. However, Denny Gold Medal sausage and Denny Deli Style cooked meats continue to benefit from re-launch marketing campaigns. Dairygold maintained a strong performance in dairy spreads. Cheestrings again grew sales due to successful launches in Poland and Austria. The ‘Yollies’ children’s yoghurt snack offering, launched in Ireland in Q3, achieved an encouraging market performance to-date.