Kerry Group plc

Good morning and welcome to our Q1 2024 trading update call. I'm joined on the call by our CEO, Edmund Scanlon, and our CFO, Marguerite Larkin. As usual, Edmund and Marguerite will take you through our presentation, and following this, we will open the lines up for your questions. Before we begin, please note the usual disclaimer on our Q1 presentation regarding forward-looking statements. I will now hand over to Edmund.

Thanks, William. Good morning, everyone, and thank you for joining our call a little earlier than usual. I'll start with a summary of my key takeaways from the first quarter before handing over to Marguerite to give a little more detail on the results. So moving first to slide four, please to report a good start to the year and the pickup in volumes in the first quarter. At Taste and Nutrition delivered 3.1% volume growth in the first quarter. This was mainly driven by another strong performance in our food service channel with volume growth of 8.6%. And this represents our 12th consecutive quarter of high single-digit or greater volume growth. And this is thanks to our unique positioning as our customer's innovation and enablement partner. We're also pleased to see North America returning to good volume growth in Q1, following the significant customer inventory management across our industry last year. On EBITDA, we delivered strong margin expansion of 140 basis points, driven by benefits from our Accelerate Operational Excellence program, along with accretion from our recent portfolio developments and the effect from pricing. Moving to capital allocation, firstly, on the M&A front, we have just closed the acquisition of the Lactase Enzymes business of Nova Nisus. And as previously indicated, we are announcing a new 300 million share buyback program today, which will mean a total capital return including dividends of over 700 million in 2024. We will remain agile and flexible in capital allocation, aligned to market conditions, prioritizing the best value creation opportunities. And finally, we remain on track for our guidance range, You will have seen we have made a slight update today to reflect the net benefit from the new share buyback program. And now I'll hand you over to Marguerite for the performance overview.

Thanks Edmund and good morning everyone. Moving to slide five and the summary group financial overview. Firstly on revenue, group volumes came in at 1.9% for the first quarter. driven by good performance in taste and nutrition of 3.1% growth. On margins, we are pleased to have delivered strong margin progression of 140 basis points, both at food level and taste and nutrition, as we continue to make good progress towards our target. And net death at the end of the period was 1.7 billion, reflecting good cash generation, capital investment, and the impact of the care buyback program. Turning to our group revenue bridge on slide six, we had group volume growth of 1.9%, as I mentioned, and slower pricing of 5.3% in Q1. Foreign currency translation was 1.4% adverse due to movements in the U.S. dollar and weakness of some emerging market currencies versus the euro. And the effect from disposals net of acquisitions was 5.1%, with a contribution from acquisitions of 0.5%, more than offset by the impact from disposals of 5.6%, primarily relating to the divestment of our sweet ingredients portfolio last year. Moving now to our taste and nutrition overview on slide seven, where our positive start to the year was driven by continued strong food service performance. We delivered good volume growth of 3.1% in the first quarter, despite needed consumer demand in the number of markets. Pricing for Q1 was 3.9% lower given overall deflation across our basket of input costs, and we delivered strong EBITDA margin expansion of 140 basis points in the period, driven by cost efficiencies from our Accelerate Operational Excellence program, portfolio developments, and the positive effect from pricing. In our end-use markets, we achieved good volume growth across our snacks, meals, meat, and beverage markets. Looking at our channels, we had strong volume growth of 8.6% in food service, with volumes in the retail channel returning to growth in Q1. And in emerging markets, we had volume growth of 5.2%, led by a strong performance in the Middle East. Turning to slide eight now and taste and nutrition performance by region. In the Americas, I am pleased to say we delivered volume growth of 3.6% in the period with a return to good volume growth in North America. This was led by a strong performance in snacks through new savory taste business wins and the number of launches incorporating our taste and salt reduction technology. Within LATAM, we achieved good volume growth in Mexico across beverage and snacks, with performance in Brazil improving in the period. In Europe, as expected, overall volumes were 1.4% lower in Q1, reflective of strong prior year comparisons of 34% and softer consumer demand. Good growth was achieved in meals through solutions incorporating our food protection, preservation, and authentic taste technologies. Beverage also performed well in functional and refreshing beverages while we had lower volumes in dairy, given very strong prior year comparisons. In apnea, we had volume growth of 4.8%, primarily driven by strong growth in the Middle East with China similar to the prior year and Southeast Asia improving in the period. In food service, we delivered strong volume growth with leading regional coffee chains and quick service restaurants. Snacks delivered excellent growth with launches incorporating our savory taste portfolio and strong growth was achieved in meat through functional and taste systems. Moving to slide 9 and Dairy Ireland, which delivered a solid start to the year in line with our expectations. Overall volumes were back 3% in the periods with good growth in dairy consumer products, while performance in dairy ingredients was reflective of market supply conditions in the quarter. Pricing was back in the period given the reduction in dairy input costs year on year, and we had EBITDA margin expansion of 70 basis points for the division. The good growth in dairy consumer products in the first quarter was driven by performance across snacking, Kerry's brand's cheese range, and private label spread. Finally, to cover off a few other financial matters on slide 10. On the input costs, we are currently seeing a lot of variation within our overall input cost basket. We expect overall mid to high single digit deflation in the first half and for this to significantly ease in the second half of the year. On currency, our outlook remains unchanged with a relatively neutral translation impact in the full year. And on share buybacks, as Edmund referenced earlier, we are commencing a new 300 million program this month, which will run to the end of the year at the latest. The net incremental accretion in the year from the new program of 50 basis points has been factored into our guidance range. Given our strong balance sheet and cash flow generation, combined with market conditions, we considered that the timing is appropriate to commence an additional share buyback program. On capital allocation, our objective remains to have an efficient balance sheet while importantly retaining capacity to reinvest in the strategic development of our business. To summarize on overall financial performance, we delivered good volume growth, particularly in food service and in the Americas, along with strong margin expansion in the first quarter. And we are pleased with our positive start to the year. And with that, I'll pass you back to Edmund.