Increased prices at Kerry Group see revenue rise by 10% despite inflation

The company's dairy division saw volumes fall by 6% despite a 14.4% rise in consumer prices

Kerry Group

Irish food company, Kerry Group reported strong growth of 8.5% on the back of higher prices, with consumer demand remaining resilient despite heightened inflation.

Releasing its interim statement for Q1, the company said growth was largely driven by its dairy, snacks and pharma markets, reporting a revenue increase of 10.3%, 8.3% of which derived from increased pricing. 

Further revenue growth was attributed to rising business volumes, up 0.2%, favourable translation currency, accounting for 1.5% and contribution from business acquisitions net of disposals of 0.3%.

The company's pre-tax profits decreased by 0.7% during the period, with the decline being attributed to the "mathematical impact of passing through input cost inflation," however, was partially offset from the firm's cost efficiency initiatives.

Despite this, Kerry Group confirmed that its full year earnings guidance remained unchanged.

"Our performance in the first quarter was driven by good volume growth in APMEA and Europe, led by strong growth in the foodservice channel, as customers in the North America retail channel worked through elevated inventory levels across the period," said chief executive, Edmond Scanlon.

"While recognising the current market uncertainty, we believe we remain strongly positioned for growth."

The company's dairy division saw volume reductions of just under 6% despite prices charged to customers rising by 14.4%, with input cost inflation driving down pre-tax profits by 0.8%.

"Dairy Ingredients volumes were impacted by high market prices and expectations of inflation turning to deflation, given global market supply and demand dynamics across the first quarter."

Despite this, Dairy Consumer Products performed well in the period, with overall growth led by Kerry’s branded cheese ranges and private-label spreads, supported by increased promotional activity.

Group net debt stood at €1.7bn at the end of Q1, with Kerry Group saying this reflected "cash generation and proceeds from the disposal of the Sweet Ingredients Portfolio."

Looking forward, Kerry Gold expects to achieve adjusted earnings per share growth in 2023 of 1% to 5% on a constant currency basis.