The Kerry Group is showing a 3.8% growth in business volumes, according to an interim statement for the first quarter of 2017 (ending March 31).

The statement was released in conjunction with the group’s Annual General Meeting, which is taking place today, May 4.

Highlights from the statement showed that the Taste & Nutrition businesses increased by 4.1%, while the Consumer Foods sector grew by 2.3%. Pricing increased overall by 1.3% during the quarter.

Kerry Group Chief Executive Stan McCarthy said:

Our first quarter highlights a good volume-driven performance across group businesses, maintaining the momentum reported in 2016. The group expects to achieve good revenue growth and 5% to 9% growth in adjusted earnings per share in 2017, as previously guided.

Business performance

In terms of business performance, Kerry reported a “solid” beginning to 2017, continuing on from “some good momentum built towards the end of last year”.

Consumer spending was restrained in many markets around the world but current consumer trends are beneficial, the company said. These health-conscious trends are aiding in the development of nutritious and clean-label products for Kerry.

In the food-service sector, business development is “steady, as a result of increased out-of-home consumption”. The Asia-Pacific region in particular is “doing well with double-digit volume growth figures recorded”.

The shock of Brexit was felt through the currency impact of a sterling devaluation in Kerry Foods. The division “continues to perform well in spite of this”.

Reported revenues rose by 4.5%, which reflects business volume growth, positive pricing, an adverse currency impact and the effect of acquisitions.

Kerry’s trading profit margin was maintained through a number of factors, according to the company. There was a 20 basis points improvement in the Taste & Nutrition section. The positive underlying margin improvement in Kerry Foods was offset by the sterling transaction impact, which resulted in a 70 basis points margin reduction. Also an increased spend on the Kerryconnect Programme was taken into account.

Taste & Nutrition

According to the statement, all regions are doing well for the Taste & Nutrition sector, culminating in a 4.1% increase overall for the quarter, with a 1.4% increase in pricing.

The Americas region recorded 3.8% volume growth and good performance in end-use-markets – in both North and South America.

For the EMEA (Europe, Middle East and Africa) region, an increase of 1.9% for business volumes, versus the same time last year, was recorded. Market conditions for the region remained much the same as in the previous quarter.

The Asia-Pacific region did particularly well however, with business volumes rising by 10.4%. Business development is continuing to do well with strategic acquisitions taking place.

Jurong, China-based Tianning Flavours was acquired by the group in China, while Adelaide, Australia-based Taste Master should bring further development to the Australia and New Zealand markets. These acquisitions were completed in April and March respectively.

Since the period end, an agreement has been reached over the acquisition of Hangzhou, China-based Hangman Flavours.

In addition to acquisitions, there is major work underway with facilities. A major expansion at the company’s Chinese production facility in Nantong was completed in late 2016 and two new production facilities were commissioned in Indonesia and the Philippines.

As well as this, a new production facility is being established in India to support taste and clean-label technology.

Consumer foods

Kerry Foods, the consumer foods division of the group, recorded a business volume growth of 2.3% relative to the same period in 2016 with an average of 1.0% increase in pricing.

Markets appear to be mixed for the various products. Examples given include the Irish butter spreads market, which is continuing to reflect a decline in value and volume, and Cheestrings, which is performing well in the UK market.

Finances and management changes

Net debt for the company was €1.2bn as of late March 2017, compared to €1.3bn at the end of 2016. On January 20, 2017, the group repaid US$192m of senior notes which matured on that date. The Kerry Group is optimistic for continued business growth and development.

In terms of management, Stan McCarthy will retire as Chief Executive on September 30, 2017. Edmond Scanlon, President and CEO of Kerry Asia Pacific, has been appointed Chief Executive Designate to succeed McCarthy.

On future prospects, Kerry stated: “The Board is confident of delivering 5% to 9% growth in adjusted earnings per share to a range of 339.6 to 352.5 cent per share, as previously guided (2016: 323.4 cent per share).”