Kerry Group shares subdued despite revenue increase and strong outlook

Ingredients, nutrition, and flavourings giant's shares have risen by less than 13% in the past 12 months

Kerry Group CEO Edmond Scanlon said the taste and nutrition group expects to deliver "strong volume and earnings growth" this year.

Shares in Kerry Group remained subdued despite the Tralee-headquartered ingredients, nutrition, and flavourings giant posting strong revenue growth so far this year and saying it expects to generate strong earnings and volume growth for 2021 as a whole.

Kerry’s shares, up less than 1% on the back of its latest trading update, have risen by less than 13% in the past 12 months despite it accelerating its transformation into a global taste and nutrition business through more acquisitions and the sale of the bulk of its consumer foods business.

Kerry said group revenues for the first nine months of this year rose by 6.3%, year-on-year, with business volumes up 8.2%.

Kerry saw strong growth in Europe, the Americas, and emerging markets. The group is now focused on being a global leader in taste and nutrition for the food, beverage, and pharmaceutical sectors and said it saw particularly strong growth in the beverage sector in the first nine months.

“We are pleased with overall performance through the period, reflecting continued good growth in our retail channel and strong performance in foodservice," said Kerry chief executive Edmond Scanlon.

Our outlook for the full year is unchanged and we expect to deliver strong volume and earnings growth."

Kerry said overall market conditions have improved, with many developed markets seeing a return to more normalised economic activity.

In July, Kerry reported a 13% jump in first-half profits and a near 5% year-on-year rise in first-half group revenues.

Earlier this month, it said it plans to spend around €120m on improving its manufacturing and supply chain operations over the next two years.

"Overall, this is another solid update from Kerry, with growth and outlook for the remainder of the year broadly in line with expectations," said Goodbody analyst Jason Molins. 

"Kerry’s recent corporate activity has made it a more pure-play ingredients company, while the acceleration of key consumer trends like health and wellness underpins its future growth prospects," he said.

Davy said the 6.3% third-quarter volume growth seen in the taste and nutrition division was "a commendable outturn" and "modestly ahead of forecast".