Food ingredients giant Kerry expects full year earnings growth to be at low end of its previously stated range following a third quarter decline in volumes and pricing in its small dairy business.
The Irish group, which supplies ingredients to the likes of McDonald's, also said pricing in its much larger taste and nutrition unit began to fall, with a third quarter decline of 1.4% reflecting some input cost deflation.
Taste And Nutrition
It said taste and nutrition, which made up 94% of Kerry's €1.2 billion in earnings last year, was strongly positioned for volume and margin growth after volumes rose 1.6% in the quarter and margins jumped 130 basis points.
However, dairy volumes tumbled 12.1% from July to September to stand 6.2% lower year-to-date, with a 17.6% quarterly fall in pricing relating to 'increased deflationary market dynamics'.
As a result Kerry, which also announced a €300 million share buyback programme on Thursday, said it expected full year earnings growth to be at the low end of its previously stated 1% to 5% constant currency range.
'Good Operating Performance'
“We delivered a good overall performance in the period recognising varying conditions across our markets," commented chief executive Edmond Scanlon. "North America saw good improvement through the third quarter, Europe performed in line with expectations while APMEA continued to deliver strong growth. Our unique positioning in foodservice supported our continued strong growth in the channel.
"We made good strategic progress through the period with further footprint expansion and strategic acquisitions, and given the group’s strong balance sheet and cash flow, we are also initiating a share buyback programme."
Additional reporting by ESM
