Kerry Group Reports 9.9% Revenue Decline in Q1 2024 Amid Global Market Conditions
Source: The DairyNews
Kerry Group's revenue witnessed a notable decrease of 9.9% in the first quarter (Q1) of 2024, as outlined in the group's interim management statement for the period.
The company attributed this decline to subdued consumer demand amidst prevalent inflationary pressures across various global regions.
The revenue breakdown comprised a 1.9% volume growth offset by a 5.3% pricing deflation, coupled with disposals (net of acquisitions) and unfavorable currency conversion, resulting in the overall decline.
Despite the revenue setback, the group reported a positive development in its earnings before interest, taxes, depreciation, and amortization (EBITDA), which increased by 140 basis points (1.4%). This growth was attributed to cost efficiencies, portfolio advancements, and the impact of pricing strategies, according to Kerry Group.
In the Taste and Nutrition business segment, volume growth expanded by 3.1%, led by snacks, meals, meat, and beverages. However, pricing experienced a decline of 3.9%, reflecting the prevailing deflationary environment.
Regionally, Taste and Nutrition observed significant volume growth of 3.6% in the Americas, primarily driven by snacks, meals, and beverages. The foodservice channel also experienced growth in this region. Conversely, Europe witnessed a 1.4% decline in volumes, largely due to constrained consumer demand in the retail sector.
Meanwhile, the Asia Pacific, the Middle East, and Africa (APMEA) regions recorded robust volume growth of 4.8%, with a particularly strong performance in the Middle East.
In the Dairy Ireland segment, volumes decreased by 3%, while pricing saw a decline of 13.7% attributed to reduced dairy input costs year-on-year. Despite this, the EBITDA margin expanded by 70 basis points (0.7%).
Kerry Group also announced a new share buyback program of up to €300 million of Kerry Group ordinary shares, in line with its Capital Allocation Framework. The company anticipates completing the program by the end of the year, subject to approval at the group's AGM.
With regards to the outlook, Kerry Group expressed confidence in its positioning for volume growth and margin expansion. However, it anticipates continued subdued consumer demand. Reflecting the share buyback program, the group updated its adjusted earnings per share (EPS) guidance range for the year to 5.5% to 8.5% growth, exceeding the previously issued range of 5% to 8%.
The revenue breakdown comprised a 1.9% volume growth offset by a 5.3% pricing deflation, coupled with disposals (net of acquisitions) and unfavorable currency conversion, resulting in the overall decline.
Despite the revenue setback, the group reported a positive development in its earnings before interest, taxes, depreciation, and amortization (EBITDA), which increased by 140 basis points (1.4%). This growth was attributed to cost efficiencies, portfolio advancements, and the impact of pricing strategies, according to Kerry Group.
In the Taste and Nutrition business segment, volume growth expanded by 3.1%, led by snacks, meals, meat, and beverages. However, pricing experienced a decline of 3.9%, reflecting the prevailing deflationary environment.
Regionally, Taste and Nutrition observed significant volume growth of 3.6% in the Americas, primarily driven by snacks, meals, and beverages. The foodservice channel also experienced growth in this region. Conversely, Europe witnessed a 1.4% decline in volumes, largely due to constrained consumer demand in the retail sector.
Meanwhile, the Asia Pacific, the Middle East, and Africa (APMEA) regions recorded robust volume growth of 4.8%, with a particularly strong performance in the Middle East.
In the Dairy Ireland segment, volumes decreased by 3%, while pricing saw a decline of 13.7% attributed to reduced dairy input costs year-on-year. Despite this, the EBITDA margin expanded by 70 basis points (0.7%).
Kerry Group also announced a new share buyback program of up to €300 million of Kerry Group ordinary shares, in line with its Capital Allocation Framework. The company anticipates completing the program by the end of the year, subject to approval at the group's AGM.
With regards to the outlook, Kerry Group expressed confidence in its positioning for volume growth and margin expansion. However, it anticipates continued subdued consumer demand. Reflecting the share buyback program, the group updated its adjusted earnings per share (EPS) guidance range for the year to 5.5% to 8.5% growth, exceeding the previously issued range of 5% to 8%.
