Kerry Group has reported “continued volume progression and strong margin expansion” for the third quarter (Q3) of 2024, despite an overall decrease in revenue over that period of 3%.
According to the group’s interim management statement, the business’ taste and nutrition division saw volume growth of 3.4% in Q3, which is “broadly in line with market expectations”.
According to Edmond Scanlon, Kerry Group’s chief executive officer, this represented “strong volume growth” in the Americas, a good performance in Asian, middle-eastern and African markets, and volumes in Europe “turning positive”.
Scanlon said that volumes in the retail channel steadily improved through the period, while foodservice continued to deliver strong growth.
The chief executive officer said that Kerry Group remains on track to achieve its full year guidance. The business is reiterating its guidance range of 7% to 10% adjusted earnings per share.
The interim statement said that consumer demand across many food and beverage markets remained relatively muted following recent inflation in many geographies.
Customer innovation activity across the period was weighted towards renovation of existing products, with an increased focus on nutritional profile enhancement, cost optimisation and improving sustainability characteristics of products.
A significant level of new product innovation concentrated on addressing increased consumer demand for new taste experiences and providing relative value options.
The group’s reported revenue in the first nine months of the year comprised volume growth of 2.2%, pricing deflation of 3.2%, contribution from acquisitions of 0.8% and the effect from disposals of 2.3%, while translation currency was “adverse”.
All this resulted in reduced overall revenues of 3% across the period.
The margin of group earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased by 140 basis points (bps).
The statement said the Taste and Nutrition division delivered good volume growth ahead of its end markets. Foodservice continued to perform strongly with volume growth of 6.8%. Growth in the retail channel improved through the period, reflecting good performances in the Americas and the Asia Pacific, Middle East, and Africa (APMEA) region.
Kerry recently announced a €15 million investment in its Biotechnology Hub in Leipzig, Germany. It is scheduled for completion in the second quarter of 2025, and will provide the space and infrastructure for additional enzyme engineering and bioprocess development.
During the period, the group also acquired the LactoSens lactose testing technology assets and related business from DirectSens, which is based in Austria.
Kerry said the operation, while being modest in scale, will enhance its position and capability in providing the “complete solution” as regards lactose-free dairy products.
As for Kerry Dairy Ireland, the group’s dairy processing division, the statement said that its EBITDA margin expansion of 120bps was driven by the dairy consumer products’ growth and mix development, as well as recovery in dairy ingredients.
The dairy consumer products performance was led by good volume growth across the group’s snacking and branded cheese ranges. Dairy ingredients volumes reflected soft overall supply conditions which improved through the period.
At the end of September, group net debt was €1.9 billion reflecting cash generation, capital investment and the share buyback programme.
The group intends to initiate a further share buyback programme of up to €300 million of Kerry Group plc shares after the completion of the existing buyback programme.
Kerry Group said its consolidated balance sheet remains strong, which will “facilitate the continued strategic development and growth of the business”.