Profits down 17.5% at Kerry Group due to lockdown measures

Profits at diary giant Kerry Group fell by almost 17.5 per cent in the first half of the year on foot of global lockdown measures introduced to combat the spread of the Covid-19 pandemic, the company's interim report shows.

The company, which employs more than 26,000 people worldwide and serves more than 150 markets, published its interim report for the first half of 2020 on Friday.

Kerry reported trading profit of €316 million, which was down from €383 million during the same period in 2019.

Trading profit margin decreased by 140 basis points (1.4 percentage points) to 9.3 per cent “primarily due to the significant operating deleverage impact resulting from the sharp decline in food service orders once lockdown measures were introduced globally”.

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The company said additional Covid-related costs were partially offset by cost mitigation actions.

Kerry reported revenue of €3.4 billion, which was a decrease of 4.3 per cent compared to the same period last year.

It said this reflected a volume reduction of 6 per cent, increased pricing of 0.4 per cent, contribution from acquisitions of 1.2 per cent, and a favourable translation currency impact of 0.1 per cent.

Constant currency adjusted earnings per share decreased by 19.8 per cent to 132.1 cent compared with the 164.7 cent the year before. Basic earnings per share decreased by 11.1 per cent to 120.4 cent from 135.5 cent the year before.

Kerry said it would pay an interim dividend of 25.9 cent per share, which was up from 23.5 cent the year before. This will be payable on November 13th to shareholders registered.

Current assets increased by €319.5m to €2.9 billion, up from €2.7 billion in December 2019 and €2.5 billion in the same period last year. The rise was mainly due to increases in cash, inventory and trade and other receivables.

Due to the continued uncertainty in relation to the extent and duration of the Covid-19 pandemic, the company said it was not providing full year earnings guidance at this time.

Kerry Group chief executive Edmond Scanlon said the pandemic had made it a challenging period for the company.

“The first half of 2020 has been an unprecedented period due to the Covid-19 pandemic, and I am immensely proud of the tremendous efforts of our people in supporting our customers and local communities throughout this period, aligned to our purpose to inspire food and nourish life,” he said.

“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 and nutrition business – particularly our foodservice channel, where the impact was most pronounced in April, with the channel recovering well since then.

“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.”

Mr Scanlon added the company had made “good progress” on a number of fronts despite the challenges.

“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.

“We will emerge a stronger organisation, as this period of uncertainty continues to enhance Kerry’s role as our customers’ most valued partner.”