Kerry Group sees lower earnings growth as food prices start to fall

Reuters

Food ingredients giant Kerry expects full year earnings growth to be at the low end of its previously stated range following a sharp third quarter decline in volumes and pricing in its small dairy business, the company said on Thursday.

The Irish group, which supplies ingredients to the likes of McDonald's, also said pricing in its much larger taste and nutrition unit began to fall, with a third quarter decline of 1.4 per cent reflecting some input cost deflation.

It said taste and nutrition, which made up 94 per cent of Kerry's €1.2 billion in earnings last year, was strongly positioned for volume and margin growth after volumes rose 1.6 per cent in the quarter and margins jumped 130 basis points.

However, dairy volumes tumbled 12.1 per cent from July to September to stand 6.2 per cent lower year-to-date, with a 17.6 per cent quarterly fall in pricing relating to "increased deflationary market dynamics".

As a result Kerry, which also announced a €300 million share buyback programme on Thursday, said it expected full year earnings growth to be at the low end of its previously stated 1 to 5 per cent constant currency range.