Kerry Group revenue increases but profit margin suffers from inflation

(Alliance News) - Kerry Group PLC on Thursday reported strong revenue growth, driven by its Taste ...

Alliance News 27 October, 2022 | 1:49PM
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(Alliance News) - Kerry Group PLC on Thursday reported strong revenue growth, driven by its Taste & Nutrition division, as it continues to deal with higher input costs due to inflation.

In a trading update on the three months to September 30, Kerry Group's reported revenue increased by 16% "in the period". The company did not immediately respond to a request for clarification of the comparisons being made in its statement.

The Tralee, Ireland-based nutrition company's earnings before interest, taxation, depreciation and amortisation margin decreased by 40 basis points, primarily due to the significant impact of passing through input cost inflation.

Within divisions, the strongest growth was recorded in Taste & Nutrition, which grew 8.2% in the third quarter. Although the division saw a 7.5% increase in pricing, its Ebitda margin narrowed by 80 basis points due to higher cost inputs.

In Dairy Ireland, overall volume growth in the year to date was 1.8%. In the third quarter volume growth was 1.0%. Pricing increased 37% reflecting "significant" increases in dairy prices and cost inputs. The EBITDA margin reduced by 190 basis points, again due to higher input costs.

Kerry said that the "resilience of supply chains" remains a key focus, particularly in the light of geopolitical volatility and inflationary pressures.

The group narrowed its full year guidance and now expects to achieve adjusted earnings per share growth in 2022 of 6% to 8% on a constant currency basis. Previously the guidance was for growth between 5% and 9%.

Chief Executive Officer Edmond Scanlon said: "We achieved excellent growth across the period through a combination of strong business volumes and pricing, as we continue to manage through this unprecedented inflationary pricing environment in collaboration with our customers. Our volume growth was broad based across our regions, channels and markets, led by excellent performances in Snacks, Beverage, Meat and Bakery in particular. We also made good strategic progress with further footprint expansion and strategic acquisitions.

"While we recognise the current level of uncertainty in the marketplace, we feel very well positioned as we continue to support our customers in addressing the various market challenges and opportunities."

Shares in Kerry were trading 2.5% lower at EUR90.36 each in London on Wednesday morning.

By Chris Dorrell; chrisdorrell@alliancenews.com

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Kerry Group PLC Class A 79.45 EUR -0.25 -

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