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Kerry Group has posted double-digit first half growth on higher sales volumes and prices as demand for ingredients to drive food and drink reformulation drove increased sales.

For the six months to 30 June Kerry Group reported a 13.3% jump in revenues to €4.1bn, driven by a volume increase of 6.8% and pricing of 8.3%.

The headline sales rise also reflects favourable a currency translation impact of 5.8% and contribution from acquisitions of 4.7%, partially offset by the dilutive impact of the disposal of the consumer foods meats and neals business of 12.4%.

The group said overall demand environment was positive through the period, helped by the continued evolution of preferences with heightened demand for new food and beverage experiences.

Despite the challenges of supply chains due to geopolitical volatility and inflationary pressures, it said the level of customer innovation remains strong, with customers continuing to evaluate the relevance and uniqueness of their product ranges, and their readiness to adapt to further changes in the consumer landscape.

Its core taste and nutrition business reported a revenue increase of 27.5% to €3.45bn driven by volume growth of 8.6% with an “excellent” Q2 performance of 10.3%.

It said strong business volume development was achieved through the period, with growth led by the beverage, meat and bakery markets in particular.

Its retail channel achieved strong growth due to customers’ increased requirements for innovation support, while the foodservice channel delivered strong double-digit growth across all regions, supported by increased seasonal menu offerings, innovations to reduce operational complexity and solutions designed to improve their overall sustainability impact.

Its Irish dairy business saw saw a pro-forma sales rise of 2.2% to €695m, with pricing of 27.8% reflecting significant increases across dairy prices and other raw material costs.

Overall group EBITDA increased by 13.1% to €518m with EBITDA margin maintained at 12.8%, primarily driven by the benefits from operating leverage, mix, efficiencies and portfolio development, offset by the impact of passing through raw material cost inflation.

CEO Edmond Scanlon commented: “”We are pleased with our overall performance and business momentum across the first half of the year despite inflationary challenges and geopolitical volatility in places, in what remains a highly dynamic marketplace.

“Volume growth was very strong in both retail and foodservice channels, driven by an increased level of innovation activity. This growth was broad-based across our regions, led by excellent performances in Beverage, Meat and Bakery end use markets in particular.

“We continued to make good progress in actively managing the unprecedented inflationary environment in conjunction with our customers, as we support them in developing their offerings to meet the rapidly evolving marketplace. We also made good strategic progress by expanding our footprint and completing a number of strategic acquisitions in the period.

“While recognising the marketplace is facing into a period of heightened uncertainty and volatility, this also presents significant opportunities. We remain confident in our outlook and are reaffirming our full year earnings guidance.”

Kerry Group shares are up 3% so far this morning to €103.10.

Morning update

On the markets this morning, the FTSE 100 is up 0.4% to 7,371.5pts.

Early risers include Ocado, up 4.2% to 818.8p, Just Eat Takeaway.com, up 3.8% to 1,457.2p and THG, up 3% to 69.1p.

Fallers include Bakkavor, down 4.6% to 91.3p, British American Tobacco, down 2.2% to 3,299.5p and AG Barr, down 2% to 540p.

Yesterday in the City

The FTSE 100 closed yesterday flat at 7,345.3pts.

Nestle shares dropped 0.4% in Switzerland to CHF117.00 after it upgraded its full year expectations as first half sales rose on pricing and volume growth, but margin expectations have been downgraded due to the impact of mounting costs.

Diageo was up 2.6% to 3,865p after the reopening of the on-trade and travel retail market saw booming annual growth, while brewer AB InBev fell 4.1% to €52.11 despite on own double-digit growth on concerns over forward guidance.

In the UK Virgin Wines fell back 7.6% to 67p after posting a sales slowdown in its financial year to 30 June.

Other fallers included Haleon, down 2.6% to 295.5p, British American Tobacco, down 2.2% to 3,372.5p, SSP Group, down 2.2% to 254.1p, Imperial Brands, down 1.8% to 1,832.5p and Nichols, down 1.6% to 1,250p.

Risers included Naked Wines, up 4.6% to 146.6p, DS Smith, up 4.1% to 288.2p, FeverTree, up 3.9% to 1,065p, Domino’s Pizza Group, up 2.9% to 283.8p, Deliveroo, up 2.7% to 89.7pand Greggs, up 2.4% to 1,992p.

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