Irish-based food and ingredients business Kerry Group has posted a 3.3% volume increase in the first quarter of its financial year.
Commenting on the group's performance, Edmond Scanlon, Kerry Group chief executive, said, "“We have made a solid start to the year with overall business performance in line with expectations."
Here's how industry analysts viewed its performance:
David Fahy, Cantor Fitzgerald
"A positive update from Kerry this morning with no major surprises. Volumes within the Taste and Nutrition business were slightly below trend but still broadly positive. AMPEA performed strongly again, its importance within the overall Group growing steadily.
"Kerry’s ability to pass throw cost inflation and improve margins remains a notable positive attribute. The fundamental investment case behind Kerry remains supportive with positive secular trends, Asia/EM penetration, high quality (and profitability), cost inflation pass through and above market growth. However, given its valuation (26x FY19 P/E) we believe upside at present is limited. As a result we maintain our Market Perform rating (downgraded last month)."
Robert Waldschmidt and Nico von Stackelberg, Liberum
"Kerry boasts the recipe for long-term success: robust volume growth, margin upside potential and rising FCF powering an 11% 2018-23E EPS CAGR. The group’s ingredients platform provides unrivalled breadth of solutions backed by global technology and innovation centres and regional development and application centres that service a diversified customer base.
"As Kerry’s customers go through a major churn in their product portfolio, the strong ingredients platform allows the group to take market share, improve mix and enhance margins. Accretive bolt-on M&A is a key driver - we estimate Kerry has €2bn+ firepower available to consolidate the ingredients market."
Liz Coen, Davy
"Kerry’s Q1 IMS confirms a good start to FY 2019, with T&N volume growth led by 9% growth in developing markets. As anticipated, FY guidance of 6-10% adjusted EPS growth (constant currency basis) was reiterated. With a strengthening innovation pipeline and M&A noted as performing very well, Kerry remains well placed.
"At first look, we envisage no material change to our FY 2019 EPS forecast of 350c, +9.0% year-on-year (yoy). We reiterate our ‘Outperform’ rating."
Jason Molins, Goodbody
"The key highlights from today’s statement are: i) T&N delivered another solid lfl volume performance of +3.8% (vs. FY19 estimate for +4.2%) driven by strong growth in meat, snacks and dairy markets. Developing markets grew 9%, while Foodservice was slightly more muted at +5.1% due to some softness in the N.American market at the start of the year; ii) T&N profit margin grew 10bps in the period driven by enhanced product mix, operating leverage and efficiencies, partially offset by investments and Brexit risk-mitigation costs; iii) Against a slightly tougher comparative, the Consumer Foods (CF) division delivered Q1 volume growth of 0.8% (vs. FY19 estimate for +1.1%).
"Good growth was delivered in Food-to-go and sausage brands offsetting the more challenged Convenience Meal Solutions (continued reduced promotional activity) and traditional spreads categories; and iv) Margins in the CF division fell 10bps largely driven by Brexit risk-mitigation costs.
"Importantly, management has reiterated its FY guidance of constant currency EPS growth of 6-10% - we currently forecast c.8% which is unlikely to change following today’s announcement."
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