Global ingredients and flavour specialist Kerry, reports of a “satisfactory performance” for the first quarter ending 31 March 2014. In its interim results statement, the group reports of 3.3% underlying sales growth for the period, driven by strong growth in its ingredients and flavors division.
The first quarter of 2014 was a more challenging period overall across food and beverage markets due to industry competitive pressures in response to constrained consumer demand. However, Kerry’s ingredients & flavours businesses maintained good continuing volume growth ahead of our markets. Continuing business volumes increased by 4% relative to the first quarter of 2013. Pricing increased by 0.4%. Despite inflationary pressures resulting from significant negative currency movements, developing markets achieved strong underlying growth.
“The Group achieved a satisfactory performance in the first quarter of 2014 despite challenging conditions in many markets and the inflationary impact of adverse currency movements in developing markets,” Kerry’s director of corporate affairs Frank Hayes said. “Following a relatively sluggish start to the year, performance in all regions improved in the latter part of Q1.”
Functional ingredients & actives recorded a solid performance across all regions – in particular in nutrition sectors. The Americas Region saw slower food and beverage industry development in North America with some categories impacted by the severe weather conditions – particularly in the foodservice sector. Kerry grew ahead of sectoral market growth rates across American markets, achieving 4% growth in continuing business volumes.
Solid growth was achieved in Latin American markets in the dairy, culinary and beverage sectors. Savoury & dairy technologies performed well in North American markets. Demand for clean label provided good growth opportunities in the meat sector. Market conditions in the cereal & sweet technology sectors proved challenging. Beverage systems & flavours maintained good growth.
EMEA Region market conditions while stable remained relatively flat from a development and industry growth perspective. Kerry’s continuing business volumes grew by 1% relative to the prior year Q1. Performance in the meat sector improved relative to Q1 2013. Cereal & sweet systems & flavours also performed satisfactorily. Dairy technology applications were impacted by dairy pricing trends.
Growth in South African markets proved challenging due to relatively weak market conditions and intense competition. Beverage systems & flavours recorded solid growth in EMEA markets. While demand in international dairy markets remained firm, primary dairy market price returns weakened towards the end of the period due to increased output from major exporting countries. Kerry hydrolysed proteins continued to perform well and strong growth was achieved in premium infant nutrition applications.
Asia Pacific markets provided a solid platform for growth where Kerry recorded a 10.8% increase in continuing business volumes. Strong double digit growth was achieved in regional developing markets which provided excellent growth opportunities for Kerry’s taste & nutritional systems and functional ingredients & actives. Developed markets in the region saw slower growth in a flat and competitive retail environment. In Asia lipid technologies performed well in nutritional applications. Savoury & dairy technologies saw slower growth in regional developed markets.
China provided excellent growth opportunities for Kerry technologies in the nutritional and foodservice sectors. A new processing facility was acquired in Nantong which significantly expands the Group’s manufacturing footprint in this fast growing marketplace. Beverage systems again achieved solid growth in the foodservice sector.
Market conditions in Australia and New Zealand proved more challenging due to industry competitive pressures arising from lower retail sales. Kerry Pinnacle maintained a good performance in the lifestyle bakery sector.
The Group’s primary consumer foods markets in the UK and Ireland remained highly competitive with increased market fragmentation in response to consumer trends. Sales through discounter channels and private label offerings continued to grow. However, Kerry Foods’ priority brands maintained brand shares in the UK and achieved encouraging category growth in a stabilised Irish marketplace. Overall divisional continuing business volumes were 0.1% lower. Pricing increased by 0.3%.
As stated at year-end 2013, Kerry Foods is focused on strengthening its consumer foods business portfolio to achieve a high quality business in line with Group metrics. Richmond maintained solid growth in the UK sausage category and Mattessons Fridge Raiders performed well in the meat snacking sector. Market conditions in the pastry sector proved challenging which impacted sales in the quarter. Cheestrings performed well in the UK market and continued to advance market development in Continental European markets.
Customer branded dairy spreads achieved good growth in the UK, as branded offerings reduced promotional activity. The chilled ready meals category proved more challenging in a relatively flat overall retail market. Sales in the frozen meals category continued to improve relative to 2013 Q4 levels.
While conditions in the Irish market have stabilised, private label and discounter offerings continue to gain market share in the sausage, cooked meats and branded cheese categories. Dairygold spreads continue to perform well in the dairy spreads sector.
