Food ingredients giant Kerry Group said it expects full year earnings growth to be at low end of its previously stated range following a sharp third quarter decline in volumes and pricing in its small dairy business.
Kerry, 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% reflecting some input cost deflation.
It said its Taste and Nutrition division, which made up 94% of Kerry's €1.2 billion in earnings last year, was strongly positioned for volume and margin growth after volumes rose 1.6% in the quarter and margins jumped 130 basis points.
Growth in the division in Europe was driven by strong performances in Ireland and the UK, Kerry noted.
However, dairy volumes tumbled 12.1% from July to September to stand 6.2% lower year-to-date, with a 17.6% quarterly fall in pricing relating to "increased deflationary market dynamics".
As a result Kerry, which also announced a €300m share buyback programme today, said it expected full year earnings growth to be at the low end of its previously stated 1% to 5% constant currency range.
Kerry said its group reported revenue in the first nine months of the year decreased by 4.2%.
It said this reflected business volume growth of 0.4%, pricing of 1.3% and a contribution from acquisitions of 1.1%, which was more than offset by the effect of disposals of 5.1% and adverse translation currency of 1.9%.
Edmond Scanlon, Kerry's CEO, said the company delivered a good overall performance in the period recognising varying conditions across our markets.
"North America saw good improvement through the third quarter, Europe performed in line with expectations while APMEA continued to deliver strong growth," the CEO said.
"Our unique positioning in foodservice supported our continued strong growth in the channel. We also made good strategic progress through the period with further footprint expansion and strategic acquisitions," he added.
Looking ahead, the company said that while market conditions remain uncertain, Kerry remains well positioned with a good innovation pipeline.
Shares in the company were lower in Dublin trade today.
