Kerry Group has reported good business momentum in the first quarter of 2021 but said that market conditions remain highly variable as differences in recovery paths are emerging across regions.

In a trading update ahead of its AGM today, Kerry said its performance reflected sustained strong growth in the retail channel.

But its foodservice channel continued to be impacted by increased restrictions in many local markets, before returning to growth in March.

It said its Asia Pacific/Middle East/Africa (APMEA) markets delivered strong growth throughout the period, Europe was impacted across the region, while the Americas had a strong finish to the quarter.

Kerry also said that its good business momentum has been supported by an increase in the level of innovation in a number of key markets.

"This momentum combined with an overall improvement in market conditions, gives us increased confidence in the full year outlook, where we are expecting to achieve strong volume growth and are guiding adjusted earnings per share growth of 11-15% in constant currency," it said.

Kerry said its Taste & Nutrition division continued its overall recovery trajectory, led by its performance in APMEA.

The Americas began with a slow start but finished strongly, while Europe remained challenged due to the level of restrictions in place across the first quarter.

It also noted that business volumes in developing markets increased by 10.7% led by strong performances in China and Brazil, while overall volumes in developed markets decreased due to the impact of restrictions on the foodservice channel.

Growth in its Consumer Foods division reflected a strong underlying performance given an estimated 3% customer stocking benefit in the previous quarter.

Kerry said this was driven by strong growth in snacking mainly through the Fridge Raiders range, with Cheestrings delivering a solid performance given school closures.

Its Oakhouse Foods products also continued to have excellent growth in the period.

Richmond had a good performance across the meat sausage range, while its plant-based meat-free ranges continued to achieve "excellent growth" supported by strong innovation and new launch activity. Spreadable butter performed well, but sliced meats were impacted by reduced deli counter operations.

Volumes in frozen meals were initially affected by customer stocking in the previous quarter, before delivering a strong finish to the period. Chilled meals achieved strong growth throughout, supported by health and wellness and plant-based launches.

Edmond Scanlon, Kerry's chief executive, said the company saw significant variability and highly dynamic market conditions right across its end use markets, channels and regions.

Edmond Scanlon, Kerry's chief executive

"Against this backdrop, I am very pleased with the business momentum we saw as we moved through the quarter. Our performance reflected sustained strong growth in the retail channel, while the foodservice channel continued to be impacted by increased restrictions in many local markets, before returning to growth in March," he said.

Mr Scanlon said the the good business momentum has been supported by an increase in the level of innovation in a number of key markets.

Kerry eyes growth in "relentless drive" to improve plant-based foods

A "relentless drive" to improve the taste of plant-based meat alternatives is driving customer numbers at Irish food and ingredients giant Kerry, which said today that it would continue to invest in the fast growing sector.

There has been a surge in demand for alternatives to meat driven by ethical and environmental concerns. Some predict the plant-based meat market could be worth $85 billion a year by 2030 as dietary habits shift.

Kerry, which says food and drinks containing its ingredients reach over one billion people around the world, is continuing to allocate more resources to enhance both their customers' plant-based products and ranges in their own consumer foods division, chief executive Edmond Scanlon said.

"None of our customers are particularly happy with the products they have in the market because they haven't yet achieved that goal of no distinguishable difference (between meat and meat alternatives)," Scanlon told an analyst call.

"It is the space where we have probably seen the biggest influx of new customers in Kerry and we're seeing larger more traditional meat players really starting to allocate and reallocate activity into this space. There's a huge amount of activity."

Plant-based products make up just over 2% of Kerry's core taste and nutrition business but is growing rapidly, Scanlon said.

The division, which focuses on food ingredients, accounts for around 90% of annual group profits and 80% of sales.

Kerry expects the plant-based market to continue to grow throughout the next 10 to 15 years, he added.

Kerry also said today that a strategic review of its dairy business in Britain and Ireland remained ongoing after talks on a potential sale to the Kerry co-op, whose shareholders include farmers that sell milk to Kerry, broke down two weeks ago.

Shares in the company moved higher in Dublin trade today.