IRELAND – Kerry Group has reported a nearly 6% fall in group revenues for the first six months of 2024, citing lower prices in its dairy Ireland and taste and nutrition businesses as key factors.
The food giant experienced a 4% price deflation across the group during this period, resulting in revenues decreasing to €3.9 billion, down 5.9%.
Despite the revenue decline, Kerry raised its full-year earnings per share guidance from 7% to 10%, attributing this to CEO Edward Scanlon’s “good performance” for the year’s first half. As a result, Kerry’s shares rose by 5.24%.
The group’s earnings before interest, tax, depreciation, and amortization (EBITDA) margins increased to 14.2%, up from 12.6% in the first six months of the previous year.
Mr. Scanlon reported volume growth across its two main business areas, with the taste and nutrition division delivering “strong profit growth and margin expansion across the business.”
However, the company noted that disposals of group properties, plants, and equipment in its North American and European markets, along with the impact of the sale of its sweet ingredients business last year, also impacted revenues.
The taste and nutrition division saw revenues rise 3.1% to €3.4 billion despite a 3.1% slide in prices. The division’s EBITDA rose 5.5% to €551 million compared to the first half of 2023.
In its dairy Ireland division, revenues fell by 1.9% to €592 million between January and June, as prices slowed by 6.9% amid continuing volatility in global milk markets. This division represented €35 million of the group’s EBITDA, up 20% compared to the first six months of 2023.
The company reported after-tax profits of €292 million, an 18% drop from €358 million posted the year before.
Kerry repurchased €279 million in shares in the first six months of the year through its buyback schemes and incurred a one-off non-trading charge of €20.2 million related to its continuing transformation program.
“We are pleased to have delivered a good financial performance in the first half,” said Kerry CFO Marguerite Larkin. “We delivered good volume growth in taste and nutrition, with solid EBITDA margin progression and continued good cash generation.”
According to analysts, Kerry’s first-half results reflect improving operating momentum, with first-half EBITDA coming 2% ahead of our forecast. Positive earnings momentum set against a flexible capital allocation model is a set-up conducive to share price accretion.
The board of Kerry Group confirmed an interim dividend of 38.1c/share, an increase of 10.1% over the 2023 interim dividend of 34.6c/share.
Commenting on the results, CEO Edmond Scanlon said that Taste & Nutrition delivered good volume growth ahead of the company’s end markets, with solid profit growth and margin expansion across the business, contributing to our earnings per share growth of 9.1%.
Taste & Nutrition’s volume growth was led by strong performances in the foodservice channel across all three regions. We continue to support established foodservice chains in evolving and developing their businesses while working with emerging leaders to upscale their operations and offerings.
Given Kerry’s innovation pipeline and the company’s financial performance in the first half of the year, the company updated its full-year constant currency adjusted earnings per share guidance to 7% to 10%, previously 5.5% to 8.5%.
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