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Irish dairy and nutrition producer Kerry Group has posted an 8.6% drop in sales as disposals and challenging conditions for its dairy business hit headline revenues.

Group revenue for the year was down 8.6% to €8bn, reflecting a 5.1% hit from disposals, which negated a 1% contrition from acquisitions, while it saw a favourable translation currency of 2.9%.

The group’s overall sales saw a pricing reduction of 0.7% and volume reduction of 0.9%.

Its core taste & nutrition division reported organic revenue growth to €6.98bn, comprised of volume growth of 1.1% and positive pricing of 1.1%. However, this was more than offset by unfavourable translation currency of 3.4% and the effect of disposals net of acquisitions of 4.8%.

Kerry said the segment achieved solid overall volume growth given the backdrop of industry destocking and pricing dynamics.

Foodservice achieved strong volume growth of 9.3%, supported by innovation with quick service restaurants, fast casuals and coffee chains in particular, while the retail channel volume reduction of 2.2% reflected customer inventory management and softer market dynamics.

Meanwhile, revenue and overall EBITDA in Dairy Ireland was lower in the year due to constrained supply conditions as well as elevated input costs impacting market demand dynamics. Dairy Ireland volumes decreased by 6.5%.

Group EBITDA margin increased by 60bps to 14.5% as benefits from its ‘Accelerate Operational Excellence’ transformation programme and portfolio developments were partially offset by the net effect from pricing.

Group EBITDA for the year was down to €1.17bn from €1.22 as organic profit growth was more than offset by the impact of disposals net of acquisitions and unfavourable translation currency.

During the year, Kerry made four strategic acquisitions and divested its sweet ingredients portfolio.

Looking forwards, the group said it had started 2024 with a good innovation pipeline and remains strongly positioned for market volume outperformance and good margin expansion.

However, it noted that consumer market volumes remain relatively muted. Given this context, in 2024 the group expects to achieve 5% to 8% adjusted earnings per share growth in constant currency.

CEO Edmond Scanlon commented: “We delivered a solid performance in 2023 recognising varying market dynamics across our regions. Overall Taste & Nutrition volume growth represented an outperformance of our markets. APMEA and Europe achieved good volume growth led by a strong performance in the foodservice channel, while volumes in North America were impacted by stocking dynamics and softer market conditions. Dairy Ireland performance reflected challenging market conditions across the year. We were pleased with our good progress in expanding our EBITDA margin and reporting strong free cash flow generation.

“During the year we continued to invest capital and develop our business aligned to our strategic priorities. This included the expansion of our taste capabilities and footprint across our regions, further development of our nutrition portfolio, and broadening our emerging markets presence. This progress builds on our significant recent strategic portfolio developments and geographical expansion, strongly positioning Kerry for market outperformance and good margin progression in the coming years.

“As we begin 2024, Kerry’s innovation pipeline is strong, though overall consumer market volumes remain relatively muted, which is reflected in our guidance for the year of 5% to 8% adjusted earnings per share growth in constant currency.”

Kerry Group shares are down 3% to €79.35 on the news.

Morning update

C&C Group has announced that senior independent non-exec director Vincent Crowley will step down from the board at the conclusion of the company’s 2024 AGM in July.

He will also step down from his role as senior independent director with effect from 15 February 2024, and Chris Browne has been appointed as in this role with effect from 15 February 2024.

Ralph Findlay, C&C Group executive chair, said: “I would like to thank Vincent for his dedication to C&C and his significant contribution to the board as non-executive director, and senior independent director has been invaluable. On behalf of the company and the board, we wish Vincent all the best for the future and are delighted to have Chris succeed him in this role.”

On the markets this morning, the FTSE 100 is up 0.2% despite the confirmation that the UK slipped into recession at the end of last year, with a quarterly GDP drop of 0.3%.

The day’s early risers include Nichols, up 4.3% to 1,021.9p, Just Eat, up 3.9% to 1,352.5p and Coca-Cola HBC, up 2.7% to 2,446.6p.

Fallers include Imperial Brands, down 4.4% to 1,808.8p, Science in Sport, down 2.1% to 16.7p and McBride, down 1.1% to 74.4p.

Yesterday in the City

The FTSE 100 close yesterday up 0.6% at 7,568.4pts.

Shares in Heineken sank 6.4% to €87.14 on the back of its results, while Coca-Cola HBC jumped 8% to 2,382p after its own strong trading update.