Kerry Foods sales revenue falls by 6.4%

06-Aug-2015 - Last updated on 07-Aug-2015 at 06:49 GMT

Richmond sausage sales were impacted by deep promotional activity

Kerry Foods has suffered losses as a result of heavy promotional activity caused by the major multiples in response to the growth of the German discounters Aldi and Lidl.

The UK and Ireland consumer foods division of Kerry Group saw sales revenues drop by 6.4% to £523M even though its volume growth was 1.9%, according to first half (H1) results to June 30.

The company, based in Ireland, said a “disciplined promotional approach” had impacted sales of Richmond sausages and its UK dairy brands also saw decline.

Nevertheless, there was growth in Kerry’s meal solutions as well as snack brands Cheestrings, LowLow Snack Packs and Mattessons Fridge Raiders.

The firm’s interim report, published today (August 6), said: “While the ready-to-cook category declined, Kerry Foods product offerings recorded good growth.

“The private label spreads sector lost market share to heavily promoted branded butter offerings.”

‘Demand for free-from'

The report described the UK consumer foods market as “highly competitive” due to deflationary trends as well as retail fragmentation and growth of online sales.

But overall, Kerry Group showed solid performance in H1 and its ingredients and flavours division brought in revenue of £1.6bn.

Kerry’s taste, nutritional and functional ingredient technologies continued to benefit from sustained business development and a solid innovation pipeline, the report said.

In the global food market, the report said there is an increasing demand for “‘clean-label’, natural, tasteful offerings” that addressed convenience and healthy preferences.

The report said: “Demand for nutritional, ‘free-from’, ‘better-for-you’ authentic taste and ingredients is increasingly driving product development across food and beverage categories for retail and foodservice channels.”

‘Strong financial performance’

In H1, the group’s business volumes grew by 2.7% and the company reported group revenue of £2.1bn, compared with £2bn in the same period last year.

Kerry Group chief executive Stan McCarthy said: "We delivered a strong financial performance in the first half of 2015 reporting continued business margin expansion and an 8.1% increase in adjusted earnings per share.

“Based on group year-to-date performance, current exchange rates and business momentum, we are increasing our market guidance for the full year."

In June Kerry acquired KFI Savory, the US-based savoury flavour business of Kraft Food Ingredients, and it has reached an agreement to acquire Costa Rican spices and seasonings producer Baltimore Spice.

Other acquisitions in the period included Turkey’s PST Pastacilik Gida, a foodservice provider of sweet ingredient solutions.