Kerry Group full-year profits impacted by exit from Russia and Belarus despite 19.3% jump in revenues | Food Business Africa Magazine

IRELAND – Food technology and ingredients company, Kerry Group, has reported a 19.3% increase in revenue to €8.8 billion (US$9.4B) and 18% organic growth while celebrating 50 years of operations.

This growth has been attributed to the increase in volume and price hikes and according to the CEO Edmond Scanlon, part of their ‘enhance and refine’ strategy.

The volume growth recorded was 6.1% across the year, while pricing rose by 11.7% in the same period.

“We made good strategic progress in the year through the development of our innovation platforms, footprint expansion and continued portfolio development,” he said.

EBITDA increased by 12.9% to €1.2 billion (US$1.28B) with an EBITDA margin of 13.9% as the dilution from the impact of passing through input cost inflation was partially offset by accretion from portfolio developments, operating leverage, mix and efficiency initiatives.

Constant currency-adjusted earnings per share increased by 7.3% to 440.6 cents while the basic earnings per share were 341.9 cents.

The group’s revenue growth happened despite the current evolving markets which saw consumers seeking new taste experiences, cleaner labels and added functional benefits in foods and beverages in 2022.

The markets are also plagued with inflation which prompts more than half of food and beverage consumers worldwide to seek value for their money.

According to ‘Innova Market Insights Top ten trends for 2023, Redefining Value’ a report from a global knowledge leader in the food and beverage industry, today’s shoppers are increasingly exploring money-saving strategies like choosing low-cost items and cooking from scratch.

The company however achieved an offsetting of its flat volume growth for dairy, despite high inflation, through a 36% increase in prices while volumes rose slightly by 0.2%.

“Overall volumes in Dairy Ireland were similar to the prior year, with the heightened inflationary cost environment resulting in significant price increases across the business,” the group said.

Russia and Belarus impact business

Last year, Kerry also suspended their business in Russia and Belarus. It reached an agreement to sell its taste and nutrition entity in Belarus and divested 100% of share capital of its Russian subsidiary to local management.

This disposal cost the group a loss of €63 million (US$67.3M), which consequently resulted in the company’s profit after tax falling to €606.5m (US$641.8M) from the €763m (US$815.5M) recorded in 2021.

Scanlon admits that there is “market uncertainty” but expects to achieve a 3-7% adjusted earnings per share growth on a constant currency basis in 2023.

Across the regions, the company’s business volume in emerging markets increased by 10.4%, with robust growth in the Middle East, Southeast Asia and in South America.

In the Americas, the company’s meat, beverage and bakery divisions led growth with Meat and Meat alternatives across food preservation, culinary taste, texture systems and clean-smoke technologies reporting an ‘excellent performance’

Growth in the European region was driven by central and southern Europe, with a 25.1% increase in revenue to €1.5 billion (US$1.6B) in the year. This reflected volume growth of 6.2%, increased pricing of 13.9%, favourable transaction currency of 0.2% and translation currency of 2.1%, with a contribution from acquisitions (net of disposals) of 2.7%.

Meanwhile, in the APMEA region revenue increased by 26.8% to €1.7 billion (US$1.8B) in the year. This reflected volume growth of 8.1%, increased pricing of 7.1%, favorable transaction currency of 0.2% and translation currency of 4.5%, with a contribution from acquisitions of 6.9%.

China’s zero-COVID policies did however harm business activity.

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Jay Ndungu

Jay is a computer scientist and journalist with a passion for the intersection of technology and society. He has a background in computer science, developing a deep understanding of the technical aspects of the industry, including programming languages and software development methodologies. Currently, He writes for Nairobi Times, covering a wide range of topics including technology, politics, sports, and entertainment. With his unique combination of technical knowledge and journalistic experience, Jay brings a unique perspective to the stories he covers, able to explain complex technical concepts in an easy-to-understand manner. His work is dedicated to bridge the gap between technology and society, and to make people more aware of the potential of technology to make the world a better place.

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