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Kerry's financial overview flags accelerated consumer trends amid COVID-19

Taste and nutrition supplier Kerry outlines recovery from the COVID-19 impact in its recently issued Interim Management Report 2020. The group reports revenue of €3.4 billion (US$4 billion), which decreased by 4.3 percent versus the same period last year, reflecting an overall volume reduction of 6 percent. During the pandemic, the company highlights a number of accelerated key consumer trends, including health and immunity enhancement, natural authentic cooking and sustainable plant protein, while many consumers reverted to “center-of-store” offerings.

“We had a strong start to the year, prior to restrictions on movement impacting business performance as we moved through the first quarter. As anticipated, we have seen a significant impact on our Taste & Nutrition business – particularly our foodservice channel, where the impact was most pronounced in April, with the channel recovering well since then,” says Edmond Scanlon, CEO of Kerry.

“Performance in our retail channel improved in the second quarter, primarily through increased consumer demand for authentic cooking, plant-based offerings and health and wellness products.”

With high market volatility across the period due to COVID-19, major swings in performance resulting from overnight changes in consumers’ purchasing and consumption behaviors were noted by Kerry.

“Shopping habits became more functional with center-of-store aisles benefitting most. Retailers scaled back many category product listings and their freshly prepared over-the-counter operations. The large traditional retailers benefitted versus the discounters, with increased average basket sizes and reduced promotional activity. Meanwhile, demand for online and delivery has increased dramatically,” the group details.

Consumer Foods division

Revenue in Kerry’s Consumer Foods division was €647 million (US$766 million), reflecting a reported decrease of 6.2 percent, as lower business volumes primarily due to the impact of the previously reported ready meals contract exit and transaction currency were partially offset by increased net pricing. The company’s chilled meals category was impacted by reduced consumer impulse purchases, while frozen meals exhibited good performance.

Kerry’s Taste & Nutrition business saw robust performance before the global spread of COVID-19. The company details: “While performance in Q2 was impacted most in April, business volumes have been recovering well since then. Kerry’s nutrition and wellness technology portfolio had a very good performance within the retail channel through customized solutions incorporating Kerry’s broad protein portfolio, fermented ingredients, probiotics and immunity enhancing technologies.”

Business volumes in the foodservice channel declined 27 percent in the first half of the year, with many out-of-home food and beverage outlets closed for an extended period of time. The impact from these closures was a major contributor to overall performance in developing markets, where business volumes declined by 3.8 percent.

In expansion developments, Kerry completed the acquisition of Tecnispice in the period – a savory taste business based in Guatemala. The group also announced the strategic development of its Georgia, US facility, creating a manufacturing plant to meet increasing demand for integrated solutions across a variety of protein applications.

Americas regional performance

Revenue in the region was €1.5 billion (US$1.8 billion), reflecting a reported decrease of 0.6 percent, with lower business volumes partially offset by marginally positive pricing, positive foreign currency translation and contribution from acquisitions.

The company’s foodservice channel in North America was impacted considerably in April, but performance has seen a significant improvement since then, benefitting from a more established infrastructure to cater for drive-through, curbside pickup and delivery options.

Meanwhile, the North American retail channel achieved “excellent growth” in its Beverage category, particularly in nutritional and plant-based beverages with a number of innovations incorporating Kerry’s immunity enhancing technologies, broad protein portfolio and natural extracts. Meals delivered very strong growth through authentic culinary solutions, with demand for natural stocks and broths increasing, as consumers turned to more home cooking once lockdown measures were introduced.Overall Meat category performance was impacted by customer product availability on retail shelves. Snacks performed very well with an increase in demand for healthy and clean label solutions, while Cereals and other centre-of-store categories experienced a rejuvenation in the period.

In Latin America (LATAM), the foodservice channel in Brazil was significantly impacted, along with some impulse driven categories within the retail channel including ice-cream and confectionery, while Beverage experienced good growth. Performance in Mexico was “better, due to good growth across a number of key end use markets.”

Europe regional performance

Revenue in the region was €657 million (US$778 million), reflecting a reported decrease of 8.4 percent, with lower business volumes partially offset by contribution from acquisitions. The foodservice channel in the region was significantly impacted in the first half of the year, as most operators were temporarily closed for an extended period of time, with the UK, Italy and Spain most affected. As restrictions began to lift in a phased manner toward the end of the period, the pace of recovery varied from country to country depending on local conditions.

The retail channel performed well, with the beverage category achieving good growth through a number of launches in low/non-alcoholic and refreshing beverage categories incorporating Kerry’s botanicals, natural extracts and sugar reduction technologies. Meat and Snacks exhibited robust performance.

Dairy delivered a solid performance in the period for this region, while international dairy markets were impacted by global supply and demand dynamics. Meals performance was softer due to reduced impulse purchases, however, cleaner label and “better for you” innovations performed well.

APMEA regional performance

Revenue in the region was €566 million (US$670 million), reflecting a reported decrease of 6.9 percent, with lower business volumes, adverse impact from currency transaction and translation, partially offset by marginally positive pricing and the contribution from acquisitions.

Performance in the period was most impacted in China, Sub-Saharan Africa and India, while performance in South East Asia, the Middle East, Australia and New Zealand was more robust.

After the initial lockdown period, foodservice in China continued to recover across the second quarter. Foodservice performance outside of China varied by country depending on the level of restrictions in place, with India being most impacted.

Retail performance in the region was led by Meat, Dairy and Snacks through a number of launches with regional leaders, while Beverage and Meals were more challenged, as consumers opted for more traditional food and beverage offerings in many geographies across the region.

The group continued to make progress in expanding its capacity and deploying technology capabilities in China and the Middle East, while also moving into its new Technology & Innovation Centre in Shanghai, China.



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