Kerry Group plc

Good day and welcome to the Kerry Group 4 Year Results 2022 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome William Lynch, Head of Investor Relations, to begin the conference. William, over to you.

Thank you, operator. Good morning and welcome to Kerry's full year 2022 results call. I'm joined on our call by our CEO, Edmund Scanlon, and our CFO, Marguerite Larkin. Edmund and Marguerite will take you through today's presentation, and following this, we will open the lines for your questions. Before we begin, please note the usual disclaimer regarding forward-looking statements. I will now hand over to Edmund.

Thanks, William. Good morning, everyone, and thank you for joining our call. So beginning with slide four and my overview comments on 2022, We're pleased to report that in Kerry's 50th year, we delivered a record year of growth against the backdrop of an exceptionally dynamic operating environment. So firstly, here on volume, I'm proud of the strong, broad-based growth we delivered across our induced markets, channels, and regions, and our double-digit growth in emerging markets, again, while navigating a number of macroeconomic challenges throughout the year. Then in pricing, We demonstrated the resiliency of our model in managing through the unprecedented inflationary environment in close collaboration with our customers. The strong double-digit organic growth we achieved in the year was a key driver of our record group revenue of €8.8 billion and our 13% increase in group EBITDA to €1.2 billion. We also made good strategic progress on a number of fronts during the year. We expanded our footprint, most notably across our emerging markets. We continue to invest and further develop our innovation platforms. We completed a number of acquisitions while also making good progress on integrating our recently acquired biotechnology, preservation, taste, and function health businesses. And finally, since the year end, we've also announced the proposed sale of our sweet ingredients portfolio as we continue to enhance and refine our business to areas where we believe we can add the most value. So now moving on to slide five and taste nutrition. And here we had excellent growth across our business through continued innovation with our customers. Reported revenue increased in the year by almost 30% to 7.4 billion euro. driven by strong volume growth of 7.8% and pricing of 8.7%, combined with favorable net M&A and currency impacts. EBITDA for the division was up over 20% to 1.2 billion euro, and an overall EBITDA margin of 16.5%. As you can see here from the chart, our taste and nutrition volumes remain strong through the year, despite the heightened level of pricing. From a channel perspective, we delivered mid-single-digit growth in retail and strong double-digit growth in food service. We achieved another standout year in emerging markets with volume up 10.4%, with growth in the Middle East, Southeast Asia and LATAM partially offset by China. Turning to slide six and our end-use market breakdown, as you can see from the chart here on the right, we had strong growth across our food and beverage markets. Within the food EUMs, we had double-digit volume growth in meat, driven by taste, texture, and preservation technologies to reduce food waste. Then on snacks, we had strong growth through local authentic savory taste profiles and our taste and salt reduction technology as customers continue to improve the nutritional profile of their products. In dairy, we had good growth in ice cream and also in dairy-free. And in bakery, we had very good growth in preservation. And the proposed sale of our sweet business will mean we're now essentially have exited our cereal-based operations. In our beverage end-use markets, our growth was driven by new innovations incorporating authentic natural taste, coffee extracts, and also our sugar reduction technologies. And then on the pharma EUM, overall volumes were lower in acceptance due to supply chain constraints during the year. Now moving to slide seven and our regional performance within taste and nutrition. Reported revenue in the Americas region increased to 4.2 billion euro with volumes up over 8% in the year and remaining relatively resilient at 6% overall in Q4. Growth in North America was strong in our retail channel, right across our customer base, and also in food service with quick service restaurants and coffee chains in particular. In LATAM, we had strong double-digit growth across both Mexico and Brazil. And in Europe, reported revenue increased to 1.5 billion euro with volume growth of 6% in the full year, including a strong last quarter also at 6%. Overall growth was particularly strong in the food service channel. Our growth in the region was broad-based across the UK, Central and Southern Europe, with the exception of Eastern Europe, where we divested our operations in Russia and in Belarus during the year. In Apia, reported revenue increased to €1.7 billion, with volumes up 8% in the full year and 6% in Q4. with both retail and food service channels contributing well to that growth. From a geographical perspective, we were very pleased with the strong double-digit growth achieved across the Middle East and Southeast Asia, which was somewhat offset by the impact of restrictions in China through the year. Then turning to slide eight in Dairy Ireland, which were delivered a solid performance in what was a year of significant price inflation. Total revenue in 2022 was €1.5 billion, with overall growth reflecting an exceptional level of inflation across dairy and other input costs during the year. Overall volume growth was modest at 0.2% in the year, reflecting a good performance considering the significant price increases across the business and a very strong prior year comparative. EBITDA was up slightly to €71 million on the year. And with that, I'll hand you over to Marguerite to give you some more detail on the financial performance. And then I'll close with the outlook and a review of our medium-term targets.