Kerry Group posts 5.9% fall in revenue as lower prices hit key divisions

Edmond Scanlon, Chief Executive Officer, Kerry Group. PIC: MAXWELLS DUBLIN

Kerry Group reported an almost 6% fall in group revenues in the first six months of this year as lower prices hit its dairy Ireland and taste and nutrition business.

The food giant saw price deflation of 4% across the group over the first half of the year, with revenues falling to €3.9bn, down 5.9%.

Despite this, Kerry raised its full-year earnings per share guidance from 7% to 10% on the back of what chief executive Edward Scanlon called a "good performance" for the first half of the year. 

Kerry’s shares were up 5.24% at 9 am.

The group’s earnings before interest, tax, depreciation and amortisation (EBITDA) margins increased to 14.2%, up from 12.6% in the first six months of last year.

Mr Scanlon reported volume growth across its two main business areas, with its taste and nutrition division delivering "strong profit growth and margin expansion across the business."

However, disposals of group properties, plant and equipment in Kerry's North American and European markets over the period coupled with the impact of the sale of its sweet ingredients business last year also impacted revenues, the company said.

Taste and nutrition saw a 3.1% rise in revenues to €3.4bn despite a 3.1% slide in prices, the company said on Wednesday. The division's EBITDA rose 5.5% to €551m over the period compared to the first half of 2023.

In its dairy Ireland division, revenues fell by 1.9% to €592m between January and June, as prices slowed by 6.9% amid continuing volatility in global milk markets. 

The division represented €35m of the group's EBITDA, up 20% compared to the first six months of 2023.

The company reported after-tax profits of €292m, an 18% drop from €358m posted the year before.

Kerry repurchased €279m in shares in the first six months of the year through its buyback schemes. It also said it incurred a one-off non-trading charge over the period of €20.2 million related to its continuing transformation programme.

"We are pleased to have delivered a good financial performance in the first half," Kerry CFO Marguerite Larkin told analysts on Wednesday morning. "We delivered good volume growth in taste and nutrition, with very strong EBITDA margin progression and continued good cash generation."

"Kerry’s first-half results reflect improving operating momentum, with first-half EBITDA coming in 2% ahead of our forecast," said analysts at Davy. "Positive earnings momentum set against a flexible capital allocation model is a set-up conducive to share price accretion.