Kerry Group sees revenues drop 8.6% amid 'challenging' conditions and muted demand

Irish food group said profit was "more than offset" by the impact of disposals and unfavourable translation currency

The food group said the demand landscape was characterised by several market dynamics, including customer destocking, shrinkflation and the impact of recent broad-based inflation on consumers’ spending habits. Picture Dan Linehan

Irish food group, Kerry has warned of "muted" consumer market volumes but said it expects good margin expansion in 2024.

Citing "challenging" market conditions and strong comparatives, Kerry said revenues dropped by 8.6% annually, totalling of €8bn according to annual results published by the company on Thursday morning. 

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) were also down 4.2% from 2022, with Kerry adding that organic profit growth was "more than offset" by the impact of disposals net of acquisitions and unfavourable translation currency.

Volumes decreased by 0.9% across the year, with pricing dropping by 0.7% as a result of the “deflationary” environment in the second half of 2023.

The food group said the demand landscape was characterised by several market dynamics, including customer destocking, shrinkflation and the impact of recent broad-based inflation on consumers’ spending habits. 

Despite these factors, Kerry said customer innovation activity "remained strong," with a "solid performance" achieved in 2023.

"We were pleased with our good progress in expanding our EBITDA margin and reporting strong free cash flow generation," said chief executive, Edmond Scanlon.

“As we begin 2024, Kerry’s innovation pipeline is strong, though overall consumer market volumes remain relatively muted, which is reflected in our guidance for the year of 5% to 8% adjusted earnings per share growth in constant currency."

Kerry’s taste and nutrition division recorded revenues of €6.98bn last year, with volumes and pricing both rising marginally by 1.1% year-on-year. It also reported that dairy pricing fell by 9.3% during the year as dairy markets prices dropped. 

In total, revenues in Dairy Ireland were fell by 6.5% to €1.28bn in what was a challenging market with “constrained” supplies.

Growth in Kerry's European region was driven by Ireland and the UK, with volumes rising by 2.9%.

The food giant added that it will pay a final dividend per share of 80.8c for 2023, with the total dividend for last year up 10.1pc to 115.4c.