Kerry Group sticks to earnings outlook as company assesses global inflation 

The Taste and Nutrition division posted growth of 6.8%, while Dairy Ireland recorded "solid growth".

Kerry Group is managing the inflationary environment 'in close collaboration with our customers', acoording to chief executive Edmond Scanlon.

Kerry Group boss Edmond Scanlon said the food group is sticking to its earnings target for this year as the company assesses the global inflation picture with its customers. 

Its latest trading update had few surprises and may suggest that the food giant may be able, for the time being, to pass on increased costs in the form of higher prices. Shares in the company — which closed 1% higher in the session — are down by almost 10% from a year ago, however.    

Stock market investors are watching closely how international food companies, including Unilever and Nestle, are faring as the war in Ukraine helps drive inflation in Europe and the US to levels not seen for many decades. Kerry Group, like other international rivals, has suspended operations in Russia.      

However, Mr Scanlon said in the update that the year had started well, as it manages "the inflationary environment in close collaboration with our customers".

While our industry is experiencing a period of heightened inflation, we remain confident in our ability to manage through this current cycle with our well-established pricing model and cost initiatives," the group stated.   

The Taste and Nutrition division posted growth of 6.8%, and Dairy Ireland recorded "solid growth as business saw significant price inflation across the period".  

Goodbody analyst Jason Molins wrote in a research note that the shares were trading at 24 times prospective earnings, which meant that "its valuation gap to peers has widened". The latest update showed that the valuation gap was "unwarranted", Goodbody added. 

Davy said that the gains for the Taste and Nutrition division were "regionally broad-based".