Kerry Group has posted a fall in half-year profit and sales as the coronavirus lockdown took its toll on the Irish food company.
Over the six months to 30 June, Kerry’s trading profit fell 17.5% to €315.9m on revenue down 4.3% to £3.41bn.
Profit margin slipped 140 basis points to 9.3%, due to “significant operating deleverage” and COVID-related costs partially offset by the company’s cost mitigation actions and negative net pricing.
Kerry said the crisis had a significant impact on its Taste & Nutrition business – particularly its foodservice channel – where the impact was most pronounced in April, with the channel recovering well since then. Revenues in the Taste & Nutrition division over the period were down 4% to €2.8bn with volumes sliding 5.6%.
Revenue in Kerry’s Consumer Foods Division dropped 6.2% to €647m, although excluding the impact of a ready meals contract exit last year the volume decline was only 0.7%. The group said the market was highly volatile across the period, with major swings in category performance resulting from overnight changes in consumers’ purchasing and consumption behaviours.
“Shopping habits became more functional with centre-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, while demand for online and delivery has increased dramatically,” it added.
Kerry said that the performance of its retail channel improved in the second quarter, mainly through increased consumer demand for authentic cooking, plant-based offerings and health and wellness products.
In spite of the challenges arising from the crisis, CEO Edmond Scanlon said Kerry continued to make good progress on a number of fronts aligned to its key strategic priorities.
“Our global operations and supply chain continue to demonstrate resilience and engagement with our customers has been overwhelmingly positive, which gives us confidence in the trajectory of business recovery,” he said.
Kerry’s outlook statement said its Taste & Nutrition business was focussed on managing through the short-term challenges to emerge an even stronger customer partner, while its Consumer Foods business continues to see short-term changes in consumer purchasing behaviour with some variability across categories.
“We will continue to invest for growth and pursue M&A opportunities aligned to strategic growth priorities. Kerry’s unique business model, broad taste and nutrition portfolio and industry-leading integrated solutions capabilities are more critical than ever, as we support our customers through this changing environment,” the company added.
Kerry stated that it will not be providing full-year earnings guidance due to continued uncertainty over the extent and duration of the pandemic.
