TIDMKYGA
RNS Number : 9807H
Kerry Group PLC
02 August 2023
2 August 2023
LEI: 635400TLVVBNXLFHWC59
KERRY GROUP
HALF YEAR RESULTS 2023
Continued Volume Growth and Good Overall Performance
SUMMARY
================================================================================================================================================================
* Group revenue of EUR4.1bn representing 5.1% organic
growth
* Group volumes +0.6% (Q2: +1.0%)
* Taste & Nutrition +1.4% (Q2: +1.6%)
- Dairy Ireland -2.5% (Q2: -0.5%)
* Group pricing +4.5% (Q2: +1.4%)
* Group EBITDA of EUR518m (H1 2022: EUR518m)
* Group EBITDA margin -20bps (Q2: +20bps)
* Adjusted EPS of 180.0 cent - up 2.1% on a constant
currency basis
* Basic EPS of 201.7 cent (H1 2022: 128.4 cent)
* Free cash flow of EUR232m reflecting 73% cash
conversion
* Interim dividend per share of 34.6 cent (H1 2022:
31.4 cent)
* Full year EPS guidance reaffirmed
Edmond Scanlon, Chief Executive Officer
"We delivered a good performance in the first half of the year recognising varying conditions
across our markets. Strong volume growth was achieved in APMEA and Europe led by our performance
in the foodservice channel, while North America saw customers work through elevated inventory
levels. We continue to see good levels of customer innovation activity, and our margins reached
an inflection point in the second quarter.
We also made good strategic progress, particularly in executing on our emerging markets strategy
with significant acquisitions and investments across APMEA and LATAM. With Kerry's strong
local footprint and track record of growth across emerging markets, these complementary strategic
developments will support our future growth ambitions.
While recognising current market conditions, we remain strongly positioned for growth and
reiterate our full year constant currency earnings guidance."
Markets and Performance
The demand environment remained resilient considering industry inflation and stocking dynamics.
Customer innovation activity primarily focused on adding new taste profiles, improving products'
nutritional characteristics and providing more relative value options for consumers.
Group reported revenue in the first half of the year increased by 1.6% to EUR4.1 billion,
reflecting business volume growth of 0.6%, pricing of 4.5% and a contribution from acquisitions
of 1.1%, partially offset by the effect of disposals of 4.5% and adverse translation currency
of 0.1%.
Group EBITDA in the first half of the year was EUR518.0m (H1 2022: EUR517.7m) as organic growth
was offset by the effect of disposals net of acquisitions. Group EBITDA margin decreased by
20bps to 12.6%, as benefits from cost efficiency initiatives and portfolio developments were
more than offset by the mathematical impact of passing through input cost inflation.
Constant currency adjusted earnings per share increased by 2.1% to 180.0 cent (H1 2022: +9.0%),
which represented an increase of 2.0% in reported currency (H1 2022: +16.1%). Basic earnings
per share of 201.7 cent (H1 2022: 128.4 cent) reflects a profit on disposal of businesses
and assets, partially offset by charges relating to the previously announced Accelerate Operational
Excellence programme.
Free cash flow was EUR232m (H1 2022: EUR226m) representing cash conversion of 73%. The year-on-year
increase in free cash flow reflected a lower working capital investment, partially offset
by increased net capital expenditure and income taxes paid.
The interim dividend of 34.6 cent per share reflects an increase of 10.2% over the 2022 interim
dividend.
Strategic Portfolio Developments
The Group made important strategic developments including two highly complementary acquisitions
which add to Kerry's strong local emerging markets footprint.
As previously announced, the acquisition of Proexcar(1) strengthened Kerry's capabilities
and leading position within the Latin American meat market, while also providing a platform
for further strategic growth within the ANDEAN region. Located in Colombia with c.120 employees,
the company produces clean-label functional ingredients.
On 31 July, the Group completed the acquisition of Greatang(2), which strongly complements
Kerry's leading authentic taste position in China, broadening and deepening its capability
and portfolio of local taste solutions, most notably in the significant foodservice hotpot
market. Headquartered in Shanghai with c.120 employees, Greatang's authentic and innovative
taste solutions will expand Kerry's strategic positioning and capability as an innovation
partner for local foodservice chains and with local and international customers within the
meals and snacks markets.
As previously announced, the Group completed the sale of the trade and assets of its Sweet
Ingredients Portfolio(3) to IRCA during the first half of the year.
(1) In May, Kerry acquired 100% of the share capital of Proexcar S.A.S. ("Proexcar") for an
initial consideration of US$44m (EUR40.4m net of working capital adjustments and subject to
routine closing adjustments) and a potential additional payment of up to US$18m (EUR16.8m)
payable in 2025 based on achieving earn-out conditions. The provisional fair value of the
expected deferred payment is US$7.6m (EUR7.1m).
(2) In July, Kerry acquired 100% of the share capital of Shanghai Greatang Orchard Food Co.,
Ltd. ("Greatang") for an initial consideration of RMB720m (EUR91.1m) subject to routine closing
adjustments, with potential additional payments of up to RMB780m (EUR98.7m) payable in tranches
annually from 2024 to 2026 based on achieving earn-out conditions.
(3) In March, Kerry completed the sale of the trade and assets of its Sweet Ingredients Portfolio
for EUR483m following routine closing adjustments, comprising of an initial cash consideration
of EUR358m plus a EUR125m interest bearing vendor loan note.
Business Performance
Taste & Nutrition
Volume growth driven by strong foodservice performance
H1 2023 Performance
Revenue EUR3,539m +1.4%(4)
EBITDA EUR523m +1.4%
EBITDA margin 14.8% -20bps
(4) volume growth
* Volume growth of 1.4% with Q2 growth of 1.6% against
strong comparatives
* Growth led by Food EUM across Dairy, Snacks and Meat
* Pricing +5.4% (Q2: +3.6%) reflecting the management
of input cost inflation
* EBITDA Margin -20bps (Q2: +40bps) with benefits from
cost efficiencies and portfolio evolution more than
offset by the impact of passing through input cost
inflation
Taste & Nutrition reported revenue increased by 2.7% to EUR3,539m driven by volume growth
and positive pricing, partially offset by adverse translation currency and the effect of disposals
net of acquisitions.
The division delivered solid volume growth in light of industry stocking and pricing dynamics.
Foodservice achieved high-single digit volume growth supported by innovation with QSRs and
coffee chains on seasonal products, menu enhancement and back-of-house efficiency solutions.
Volumes in the retail channel were lower due to continued customer inventory management in
North America.
Within the division, the Food EUM achieved good volume growth led by Dairy, Snacks and Meat.
This was supported by strong performances in savoury taste, functional systems, and Tastesense(R)
salt and sugar reduction technologies. Business volumes in emerging markets increased by 6.0%
driven by strong growth in the Middle East.
Within the global Pharma EUM, performance was led by good volume growth in cell nutrition
and excipients.
Americas Region
* Volumes -2.2% (Q2: -2.7%)
* Retail channel saw softer market conditions while
foodservice performed well
* Within the Food EUM, good volume growth was achieved
in Snacks and Dairy
* LATAM delivered solid growth
Reported revenue in the Americas region increased slightly by 0.1% to EUR1,936m, with positive
pricing and favourable translation currency offset by lower volumes and the effect of disposals
net of acquisitions.
Performance in the region reflected strong comparatives and customer inventory reductions,
particularly in the retail channel across the Beverage, Bakery and Meals markets. There continued
to be a good rate of new launch activity in the region considering these dynamics. Foodservice
delivered good growth through key menu item enhancements and back-of-house efficiency solutions
with QSRs and coffee chains in particular.
Within North America, growth in Snacks was driven by new authentic taste-led innovations with
global leaders and emerging brands within the category. Dairy also performed well with functional
and taste system innovations across ice cream and desserts. While meat industry conditions
were challenged through the first half, we continued to see good launch activity with culinary
taste, texture and preservation systems.
Latin America delivered solid growth despite some operational constraints in Mexico, with
growth led by strong performances in the Snacks and Beverage markets through new authentic
taste innovations.
Europe Region
* Volumes +4.6% (Q2: +5.3%)
* Dairy, Snacks and Meat delivered strong growth
* Foodservice achieved excellent growth with a solid
performance in retail
Reported revenue in the Europe region increased by 5.8% to EUR771m driven by volume growth
and positive pricing, partially offset by an adverse effect from foreign currency and disposals
net of acquisitions. Growth within the region was led by strong performances in the UK and
Ireland.
The region achieved excellent growth in the foodservice channel driven by menu enhancement
activity, seasonal products and ongoing nutritional profile improvements. Growth in the retail
channel reflected a solid performance in the region considering the current inflationary environment.
Dairy achieved good growth with strong performances in dairy applications for the foodservice
channel including new innovations in ice cream. Snacks delivered strong growth through savoury
taste systems and Tastesense(R) salt reduction technologies, while growth in Meat was driven
by innovations in culinary taste and texture coating systems.
APMEA Region
* Volumes +7.1% (Q2: +8.8%)
* Growth led by Meat, Meals and Snacks
* Foodservice achieved very strong growth and retail
performed well
Reported revenue in the APMEA region increased by 5.8% to EUR813m driven by volume growth,
positive pricing and a favourable effect from transaction currency, partially offset by adverse
translation currency and the effect of disposals net of acquisitions.
Within the region, strong growth was achieved in the Middle East and South Asia Pacific, with
overall performance in China improving through the first half.
Growth was strong across the Food EUM, particularly in the foodservice channel. Meat achieved
good growth driven by local authentic taste and texture solutions, while Meals delivered strong
growth through culinary taste systems and functional ingredients. Snacks achieved good growth
in savoury taste applications through new launch activity with regional leaders.
During the first half, Kerry opened its new authentic taste facility in Karawang, Indonesia.
This expands the Group's local footprint and applications capability to support customers
in key end use markets across Southeast Asia.
Dairy Ireland
Performance reflective of market conditions
H1 2023 Performance
Revenue EUR675m -2.5%(5)
EBITDA EUR29m -24.0%
EBITDA margin 4.3% -120bps
(5) volume growth
* Volumes -2.5% (Q2: -0.5%) as growth in Dairy Consumer
Products more than offset by lower volumes in Dairy
Ingredients
* Pricing +0.4% with reduced pricing in Q2 reflective
of dairy markets
* EBITDA margin reduction driven by the significant
impact from changes in dairy sales prices
Reported revenue in the division decreased by 3.0% to EUR675m, with positive pricing more
than offset by lower volumes and adverse translation and transaction currency effects.
Volumes in Dairy Ireland were lower in the first half with elevated input costs impacting
overall market demand dynamics. Within Dairy Ingredients, the lower volumes principally reflected
softer market supply, while Dairy Consumer Products performed well, with volume growth led
by Kerry's branded cheese ranges and private-label spreads.
Financial Review
% H1 2023 H1 2022
change EUR'm EUR'm
Revenue +1.6% 4,121.6 4,057.8
EBITDA +0.1% 518.0 517.7
EBITDA margin 12.6% 12.8%
Depreciation (net) (109.0) (108.1)
Computer software amortisation (15.6) (18.9)
Finance costs (net) (27.5) (34.1)
Share of joint ventures' results after taxation (0.7) 1.1
-------------------------------------------------------------------------------- ------------------------------------- ---------------------------------------
Adjusted earnings before taxation 365.2 357.7
Income taxes (excluding non-trading items) (45.8) (44.9)
-------------------------------------------------------------------------------- ------------------------------------- ---------------------------------------
Adjusted earnings after taxation +2.1% 319.4 312.8
Brand related intangible asset amortisation (26.5) (23.1)
Non-trading items (net of related tax) 65.0 (62.1)
------------------------------------------------------------------ ------------ ------------------------------------- ---------------------------------------
Profit after taxation 357.9 227.6
------------------------------------------------------------------ ------------ ------------------------------------- ---------------------------------------
Attributable to:
Equity holders of the parent 358.2 227.6
Non-controlling interests (0.3) -
-------------------------------------- ---------------------------------------- ------------------------------------- ---------------------------------------
357.9 227.6
EPS EPS
cent cent
Basic EPS +57.1% 201.7 128.4
Brand related intangible asset amortisation 14.9 13.0
Non-trading items (net of related tax) (36.6) 35.0
================================================================== ============ ===================================== =======================================
Adjusted* EPS +2.0% 180.0 176.4
Impact of exchange rate translation +0.1%
------------------------------------------------------------------ ------------ ------------------------------------- ---------------------------------------
Adjusted* EPS growth in constant currency +2.1%
================================================================== ============ ===================================== =======================================
* Before brand related intangible asset amortisation and non-trading items (net of related
tax).
See Financial Definitions section for definitions, calculations and reconciliations of Alternative
Performance Measures.
Revenue
The table below presents the revenue growth components for the Group and reporting segments.
Volume Reported
H1 2023 performance Price Currency(6) Acquisitions Disposals performance
========================= =========== ========================== ================ ================ ====================== ================================
Taste & Nutrition 1.4% 5.4% (0.1%) 1.3% (5.3%) 2.7%
========================= =========== ========================== ================ ================ ====================== ================================
Dairy Ireland (2.5%) 0.4% (0.9%) - - (3.0%)
========================= =========== ========================== ================ ================ ====================== ================================
Group 0.6% 4.5% (0.1%) 1.1% (4.5%) 1.6%
========================= =========== ========================== ================ ================ ====================== ================================
(6) This includes the impact of transaction and translation currency
Volume Reported
H1 2022 performance Price Currency(7) Acquisitions Disposals performance
========================= =========== ========================== ================ ================ ====================== ================================
Taste & Nutrition 8.6% 5.9% 7.2% 6.3% (0.5%) 27.5%
========================= =========== ========================== ================ ================ ====================== ================================
Dairy Ireland(8) 1.2% 15.4% 2.0% - (46.1%) (27.5%)
========================= =========== ========================== ================ ================ ====================== ================================
Group 6.8% 8.3% 5.9% 4.7% (12.4%) 13.3%
========================= =========== ========================== ================ ================ ====================== ================================
(7) This includes the impact of transaction and translation currency
(8) Within the Dairy Ireland H1 2022 base comparatives are the results of the Consumer Foods
Meats and Meals business which was disposed by the Group on 27 September 2021
EBITDA & Margin %
Group EBITDA increased 0.1% to EUR518.0m (H1 2022: EUR517.7m). Reported EBITDA margin of 12.6%
(H1 2022: 12.8%) reflects benefits from cost efficiency initiatives and portfolio developments
which were more than offset by the mathematical impact of passing through input cost inflation.
Finance Costs (net)
Finance costs (net) for H1 2023 decreased by EUR6.6m to EUR27.5m (H1 2022: EUR34.1m) primarily
due to deposit interest earned on cash at bank and interest earned on the vendor loan note.
Taxation
The tax charge for H1 2023 before non-trading items was EUR45.8m (H1 2022: EUR44.9m) representing
an effective tax rate of 13.5% (H1 2022: 13.4%) and is reflective of the geographical mix
of earnings .
Non-Trading Items
During the period, the Group incurred a net non-trading items credit of EUR65.0m (H1 2022:
EUR62.1m charge) net of tax. The credit in H1 2023 primarily related to the gain on the disposal
of the Group's Sweet Ingredients Portfolio, which was partially offset by costs relating to
the Accelerate Operational Excellence transformation programme. The charge in the prior period
primarily related to the impairment of the Group's Russia and Belarus assets and the Accelerate
Operational Excellence transformation programme.
Return on Average Capital Employed (ROACE)
The ROACE for the Group in H1 2023 was 10.1% (H1 2022: 10.2%). The movement is primarily due
to the net impact of acquisitions and divestments and the translation impact on underlying
assets more than offsetting underlying organic growth.
Free Cash Flow
The Group achieved free cash flow of EUR231.9m in H1 2023 (H1 2022: EUR226.0m) reflecting
73% cash conversion, with a lower investment in working capital year on year partially offset
by higher income taxes paid and net capital expenditure due to the timing of projects.
H1 2023 H1 2022
Free Cash Flow EUR'm EUR'm
EBITDA 518.0 517.7
Movement in average working capital (103.2) (164.2)
Pension contributions paid less pension expense (2.7) (7.0)
Finance costs paid (net) (19.5) (14.6)
Income taxes paid (55.0) (31.9)
Capital expenditure (net) (105.7) (74.0)
Free cash flow 231.9 226.0
================================================================== ========================================================== ================================
Cash conversion(9) 73% 72%
(9) Cash conversion is free cash flow expressed as a percentage of adjusted earnings after
taxation
Total Net Debt
At 30 June 2023, total net debt was EUR1,846.5m (31 December 2022: EUR2,217.4m). The decrease
of EUR370.9m primarily reflected sales proceeds from the disposal of the Group's Sweet Ingredients
Portfolio.
Key Financial Ratios
The Group's balance sheet is in a strong position. With a Net debt to EBITDA ratio of 1.6
times, the Group has sufficient headroom to support future growth plans.
H1 2023 H1 2022
================================================================== ============ ================ ====================== ================================
Net debt: EBITDA 1.6 2.1
EBITDA: Net interest 19.0 16.0
Principal Risks and Uncertainties
Details of the principal risks and uncertainties facing the Group can be found in the 2022
Annual Report on pages 98 to 104 and continue to be the principal risks and uncertainties
facing the Group for the remaining six months of the financial year. These risks include but
are not limited to; portfolio management, business acquisition and divestiture, climate change
and environmental, people, business ethics and social responsibility, food safety, quality
and regulatory, health & safety, margin management, cyber and information systems security,
operational and supply chain resilience, intellectual property, taxation and treasury. The
viability of the Group was also assessed by considering the potential impact of climate related
risks on profitability and liquidity, continuing inflationary cost pressures, customer inventory
management and rising interest rates during the period. The Group actively manages all risks
through its control and risk management process.
Dividend
In line with our dividend strategy, the Board has declared an interim dividend of 34.6 cent
per share, compared to the prior year interim dividend of 31.4 cent, payable on 10 November
2023 to shareholders on the record date 13 October 2023.
Future Prospects
While market conditions remain uncertain, Kerry remains strongly positioned for growth with
a good innovation pipeline. The Group will continue to manage through the current input cost
environment in collaboration with our customers. Kerry will continue to invest capital and
develop its portfolio aligned to its strategic priorities. The Group expects to achieve adjusted
earnings per share growth in 2023 of 1% to 5% on a constant currency basis.
Note: Constant currency earnings guidance includes an expected net 2% dilution from portfolio
developments. Foreign exchange translation is expected to be a headwind of approximately 4%
on earnings in the full year based on prevailing rates.
Responsibility Statement
The Directors are responsible for preparing the Half Yearly Financial Report in accordance
with the Transparency (Directive 2004/109/EC) Regulations 2007 as amended ('the Regulations'),
the Central Bank (Investment Market Conduct) Rules 2019, the Disclosure Guidance and Transparency
Rules of the UK's Financial Conduct Authority and with IAS 34 'Interim Financial Reporting'
as adopted by the European Union.
The Directors confirm that to the best of their knowledge:
> the Group Condensed Consolidated Interim Financial Statements for the half year ended 30
June 2023 have been prepared in accordance with the international accounting standard applicable
to interim financial reporting adopted pursuant to the procedure provided for under Article
6 of the Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19
July 2002;
> the Interim Management Report includes a fair review of the important events that have occurred
during the first six months of the financial year, and their impact on the Group Condensed
Consolidated Interim Financial Statements for the half year ended 30 June 2023, and a description
of the principal risks and uncertainties for the remaining six months; and
> the Interim Management Report includes a fair review of the related party transactions that
have occurred during the first six months of the current financial year and that have materially
affected the financial position or the performance of the Group during that period, and any
changes in the related parties' transactions described in the last Annual Report that could
have a material effect on the financial position or performance of the Group in the first
six months of the current financial year.
On behalf of the Board
Edmond Scanlon Marguerite Larkin
Chief Executive Officer Chief Financial Officer
1 August 2023
Disclaimer: Forward Looking Statements
This Announcement contains forward looking statements which reflect management expectations
based on currently available data. However actual results may differ materially from those
expressed or implied by these forward looking statements. These forward looking statements
speak only as of the date they were made, and the Company undertakes no obligation to publicly
update any forward looking statement, whether as a result of new information, future events
or otherwise.
CONTACT INFORMATION
============================================================
Investor Relations
Marguerite Larkin , Chief Financial Officer
+353 66 7182292 | investorrelations@kerry.ie
William Lynch , Head of Investor Relations
+353 66 7182292 | investorrelations@kerry.ie
Media
Catherine Keogh , Chief Corporate Affairs & Brand Officer
+353 45 930188 | corpaffairs@kerry.com
Website
www.kerry.com
RESULTS FOR THE HALF YEARED 30 JUNE 2023
Kerry Group plc
Condensed Consolidated Income Statement
for the half year ended 30 June 2023
Before
Non-Trading Non-Trading Half year Half year Year
Items Items ended ended ended
30 June 30 June 30 June 30 June 31 Dec.
2023 2023 2023 2022 2022
Unaudited Unaudited Unaudited Unaudited Audited
Notes EUR'm EUR'm EUR'm EUR'm EUR'm
Continuing operations
Revenue 2 4,121.6 - 4,121.6 4,057.8 8,771.9
Earnings before interest, tax,
depreciation and amortisation 2 518.0 - 518.0 517.7 1,216.1
Depreciation (net) and intangible
asset amortisation 2 (151.1) - (151.1) (150.1) (304.3)
Non-trading items 3 - 40.5 40.5 (69.5) (146.2)
Operating profit 366.9 40.5 407.4 298.1 765.6
Finance income 4 5.7 - 5.7 0.8 6.6
Finance costs 4 (33.2) - (33.2) (34.9) (72.8)
Share of joint ventures' results after taxation (0.7) - (0.7) 1.1 (0.4)
Profit before taxation 338.7 40.5 379.2 265.1 699.0
Income taxes (45.8) 24.5 (21.3) (37.5) (92.5)
Profit after taxation 292.9 65.0 357.9 227.6 606.5
Attributable to:
Equity holders of the parent 358.2 227.6 606.4
Non-controlling interests (0.3) - 0.1
357.9 227.6 606.5
Earnings per A ordinary share Cent Cent Cent
- basic 5 201.7 128.4 341.9
- diluted 5 201.5 128.2 341.3
Condensed Consolidated Statement of Comprehensive Income
for the half year ended 30 June 2023
Half year Half year Year
ended ended ended
30 June 30 June 31 Dec.
2023 2022 2022
Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Profit after taxation 357.9 227.6 606.5
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Fair value movements on cash flow hedges 1.5 (0.3) 5.9
Cash flow hedges - reclassified to profit or loss from equity 0.4 (1.4) (2.8)
Net change in cost of hedging 0.5 0.2 0.8
Deferred tax effect of fair value movements on cash flow hedges (0.4) - (0.2)
Exchange difference on translation of foreign operations (89.4) 265.3 152.2
Cumulative exchange difference on translation recycled on disposal (0.7) - 14.9
Items that will not be reclassified subsequently to profit or loss:
Re-measurement on retirement benefits obligation (27.1) 130.3 (13.4)
Deferred tax effect of re-measurement on retirement benefits obligation 6.6 (27.7) 7.6
Net (expense)/income recognised directly in total other comprehensive income (108.6) 366.4 165.0
Total comprehensive income 249.3 594.0 771.5
Attributable to:
Equity holders of the parent 249.6 594.0 771.4
Non-controlling interests (0.3) - 0.1
249.3 594.0 771.5
Condensed Consolidated Balance Sheet
as at 30 June 2023
30 June 30 June 31 Dec.
2023 2022 2022
Unaudited Unaudited Audited
Notes EUR'm EUR'm EUR'm
Non-current assets
Property, plant and equipment 2,068.8 2,161.1 2,099.3
Intangible assets 5,686.5 5,968.9 5,720.0
Financial asset investments 54.9 53.1 58.9
Investments in joint ventures 41.1 22.9 41.7
Other non-current financial instruments 7 125.7 2.7 0.3
Retirement benefits asset 9 96.2 221.6 95.6
Deferred tax assets 75.7 72.1 71.9
8,148.9 8,502.4 8,087.7
Current assets
Inventories 1,312.7 1,496.1 1,354.4
Trade and other receivables 1,329.6 1,471.7 1,423.8
Cash at bank and in hand 10 660.8 757.2 970.0
Other current financial instruments 19.3 108.3 59.5
Assets classified as held for sale 8 0.6 22.4 388.0
3,323.0 3,855.7 4,195.7
Total assets 11,471.9 12,358.1 12,283.4
Current liabilities
Trade and other payables 1,780.1 2,047.9 1,966.5
Borrowings and overdrafts 10 1.3 724.2 701.1
Other current financial instruments 8.5 108.6 18.4
Tax liabilities 172.3 148.5 190.9
Provisions 12.8 16.6 15.3
Deferred income 4.2 3.3 3.4
Total liabilities directly associated with assets classified as held for sale 8 - - 19.7
1,979.2 3,049.1 2,915.3
Non-current liabilities
Borrowings 10 2,426.5 2,441.7 2,432.6
Other non-current financial instruments 16.1 16.8 20.3
Retirement benefits obligation 9 53.1 19.8 30.2
Other non-current liabilities 135.1 148.3 142.6
Deferred tax liabilities 432.1 533.1 452.3
Provisions 57.8 42.2 50.5
Deferred income 14.1 16.7 16.0
3,134.8 3,218.6 3,144.5
Total liabilities 5,114.0 6,267.7 6,059.8
Net assets 6,357.9 6,090.4 6,223.6
Equity
Share capital 12 22.1 22.1 22.1
Share premium 398.7 398.7 398.7
Other reserves (8.4) 145.7 64.3
Retained earnings 5,944.1 5,522.2 5,736.8
Equity attributable to equity holders of the parent 6,356.5 6,088.7 6,221.9
Non-controlling interests 1.4 1.7 1.7
Total equity 6,357.9 6,090.4 6,223.6
Condensed Consolidated Statement of Changes in Equity
for the half year ended 30 June 2023
Attributable to equity holders of the parent
======================================================================================
Non-
Share Share Other Retained Controlling Total
Capital Premium Reserves Earnings Total Interests Equity
Note EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
At 1 January 2022 22.1 398.7 (129.6) 5,310.0 5,601.2 - 5,601.2
Profit after taxation - - - 227.6 227.6 - 227.6
Other comprehensive income - - 263.8 102.6 366.4 - 366.4
Total comprehensive income - - 263.8 330.2 594.0 - 594.0
Dividends paid 6 - - - (118.0) (118.0) - (118.0)
Share-based payment expense - - 11.5 - 11.5 - 11.5
Non-controlling interests arising on
acquisition - - - - - 1.7 1.7
At 30 June 2022 - unaudited 22.1 398.7 145.7 5,522.2 6,088.7 1.7 6,090.4
Profit after taxation - - - 378.8 378.8 0.1 378.9
Other comprehensive expense - - (92.8) (108.6) (201.4) - (201.4)
Total comprehensive income - - (92.8) 270.2 177.4 0.1 177.5
Dividends paid 6 - - - (55.6) (55.6) - (55.6)
Share-based payment expense - - 11.4 - 11.4 - 11.4
Non-controlling interests arising on
acquisition - - - - - (0.1) (0.1)
At 31 December 2022 - audited 22.1 398.7 64.3 5,736.8 6,221.9 1.7 6,223.6
Profit after taxation - - - 358.2 358.2 (0.3) 357.9
Other comprehensive expense - - (87.7) (20.9) (108.6) - (108.6)
Total comprehensive income - - (87.7) 337.3 249.6 (0.3) 249.3
Dividends paid 6 - - - (130.0) (130.0) - (130.0)
Share-based payment expense - - 15.0 - 15.0 - 15.0
At 30 June 2023 - unaudited 22.1 398.7 (8.4) 5,944.1 6,356.5 1.4 6,357.9
Other Reserves comprise the following:
Share-
Capital Other Based Cost of
Redemption Undenominated Payment Translation Hedging Hedging
Reserve Capital Reserve Reserve Reserve Reserve Total
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
At 1 January 2022 1.7 0.3 107.4 (238.1) 1.4 (2.3) (129.6)
Other comprehensive
income/(expense) - - - 265.3 (1.7) 0.2 263.8
Share-based payment expense - - 11.5 - - - 11.5
At 30 June 2022 - unaudited 1.7 0.3 118.9 27.2 (0.3) (2.1) 145.7
Other comprehensive
(expense)/income - - - (98.2) 4.8 0.6 (92.8)
Share-based payment expense - - 11.4 - - - 11.4
At 31 December 2022 -
audited 1.7 0.3 130.3 (71.0) 4.5 (1.5) 64.3
Other comprehensive
(expense)/income - - - (90.1) 1.9 0.5 (87.7)
Share-based payment expense - - 15.0 - - - 15.0
At 30 June 2023 - unaudited 1.7 0.3 145.3 (161.1) 6.4 (1.0) (8.4)
Condensed Consolidated Statement of Cash Flows
for the half year ended 30 June 2023
Half year Half year Year
ended ended ended
30 June 2023 30 June 2022 31 Dec. 2022
Unaudited Unaudited Audited
Notes EUR'm EUR'm EUR'm
Cash flows from operating activities
Profit before taxation 379.2 265.1 699.0
Adjustments for:
Depreciation (net) 109.0 108.1 221.6
Intangible asset amortisation 42.1 42.0 82.7
Share of joint ventures' results after taxation 0.7 (1.1) 0.4
Non-trading items income statement (income)/charge 3 (40.5) 69.5 146.2
Finance costs (net) 4 27.5 34.1 66.2
Change in working capital (89.7) (278.0) (224.0)
Pension contributions paid less pension expense (2.7) (7.0) (15.7)
Payments on non-trading items (39.5) (36.1) (85.4)
Exchange translation adjustment (1.9) (17.9) (27.2)
Cash generated from operations 384.2 178.7 863.8
Income taxes paid (55.0) (31.9) (80.0)
Finance income received 2.8 0.8 5.4
Finance costs paid (22.3) (15.4) (67.4)
Net cash from operating activities 309.7 132.2 721.8
Investing activities
Purchase of assets (99.8) (61.3) (221.0)
Proceeds from the sale of assets (net of disposal expenses) 3 11.5 3.2 38.1
Capital grants received - - 1.4
Purchase of businesses (net of cash acquired) 11 (41.5) (244.6) (353.8)
(Payments)/receipts relating to previous acquisitions (1.3) 1.7 (1.8)
Purchase of investments (3.1) (4.8) (10.4)
Purchase of share in joint ventures - - (20.4)
Disposal of businesses (net of disposal expenses) 3 335.5 - (15.2)
Net cash from/(used in) investing activities 201.3 (305.8) (583.1)
Financing activities
Dividends paid 6 (130.0) (118.0) (173.6)
Payment of lease liabilities (17.4) (15.9) (35.1)
Issue of share capital 12 - - -
Repayment of borrowings (net of swaps) (659.6) - (3.0)
Proceeds from borrowings 1.3 0.1 2.0
Net cash movement due to financing activities (805.7) (133.8) (209.7)
Net decrease in cash and cash equivalents (294.7) (307.4) (71.0)
Cash and cash equivalents at beginning of the period 969.8 1,033.8 1,033.8
Exchange translation adjustment on cash and cash equivalents (14.3) 17.8 7.0
Cash and cash equivalents at end of the period 10 660.8 744.2 969.8
Reconciliation of Net Cash Flow to Movement in Net Debt
Net decrease in cash and cash equivalents (294.7) (307.4) (71.0)
Cash flow from debt financing 658.3 (0.1) 1.0
Changes in net debt resulting from cash flows 363.6 (307.5) (70.0)
Fair value movement on interest rate swaps (net of adjustment to
borrowings) 2.0 (2.3) 1.4
Exchange translation adjustment on net debt (0.3) (28.4) (29.7)
Movement in net debt in the period 365.3 (338.2) (98.3)
Net debt at beginning of the period - pre lease liabilities (2,148.2) (2,049.9) (2,049.9)
Net debt at end of the period - pre lease liabilities (1,782.9) (2,388.1) (2,148.2)
Lease liabilities (63.6) (68.2) (69.2)
Net debt at end of the period 10 (1,846.5) (2,456.3) (2,217.4)
Notes to the Condensed Consolidated Interim Financial Statements
for the half year ended 30 June 2023
1. Accounting policies
These Condensed Consolidated Interim Financial Statements for the half year ended 30 June
2023 have been prepared in accordance with International Financial Reporting Standards ('IFRS'),
the International Financial Reporting Interpretations Committee ('IFRIC') and in accordance
with IAS 34 'Interim Financial Reporting'. The Group financial statements have also been prepared
in accordance with IFRS adopted by the European Union ('EU') which comprise standards and
interpretations approved by the International Accounting Standards Board ('IASB'). The Group
financial statements comply with Article 4 of the EU IAS Regulation. IFRS adopted by the EU
differs in certain respects from IFRS issued by the IASB. References to IFRS refer to IFRS
adopted by the EU. The accounting policies applied by the Group in these Condensed Consolidated
Interim Financial Statements are the same as those detailed in the 2022 Annual Report.
In preparing the Group Condensed Consolidated Interim Financial Statements, the significant
judgements made by management in applying the Group's accounting policies and the key sources
of estimation uncertainty were the same as those applied to the Consolidated Financial Statements
for the year ended 31 December 2022.
Going concern
The Group Condensed Consolidated Interim Financial Statements have been prepared on the going
concern basis of accounting. The Directors have considered the Group's business activities
and how it generates value, together with the main trends and factors likely to affect future
development, business performance and position of the Group. The viability of the Group was
also assessed by considering the potential impact of climate related risks on profitability
and liquidity, continuing inflationary cost pressures, customer inventory management and rising
interest rates during the period. Following these assessments, the Directors have concluded
there are no material uncertainties that cast a significant doubt on the Group's ability to
continue as a going concern over a period of at least 12 months from the date of these financial
statements.
The Directors report that they have satisfied themselves that the Group is a going concern,
having adequate resources to continue in operational existence for the foreseeable future.
In forming this view, the Directors have reviewed the Group's forecast for a period not less
than 12 months, the medium-term plan and its cashflow implications have been taken into account
including proposed capital expenditure, and compared these with the Group's committed borrowing
facilities and projected gearing ratios.
The following Standards and Interpretations are effective for the Group from 1 January 2023 Effective Date
but do not have a material effect on the
results or financial position of the Group:
- IAS 1 (Amendments) Presentation of Financial Statements 1 January 2023
- IFRS 17 Insurance Contracts 1 January 2023
- IAS 8 (Amendments) Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2023
- IAS 12 (Amendments) Income Taxes 1 January 2023
The following Standards and Interpretations are not yet effective for the Group and are not Effective Date
expected to have a material effect on the results or financial position of the Group:
- IAS 1 (Amendments) Presentation of Financial Statements 1 January 2024
- IFRS 16 (Amendments) Leases 1 January 2024
2. Analysis of results
The Group has determined it has two reportable segments: Taste & Nutrition and Dairy Ireland.
The Taste & Nutrition segment is a world leading provider of taste and nutrition solutions
for the food, beverage and pharmaceutical markets. Utilising a broad range of ingredient solutions
to innovate with our customers to create great tasting products, with improved nutrition and
functionality, while ensuring a better impact for the planet. Kerry is driven to be our customers'
most valued partner, creating a world of sustainable nutrition through solving our customers'
most complex challenges with differentiated solutions. The Taste & Nutrition segment supplies
industries across Europe, Americas and APMEA (Asia Pacific, Middle East and Africa). The Dairy
Ireland segment is a leading Irish provider of value-add dairy ingredients and consumer products.
Our dairy ingredients product portfolio includes functional proteins and nutritional bases,
while our dairy consumer brands can be found in chilled cabinets in retailers across Ireland
and the UK.
Half year ended 30 June 2023 - Unaudited Half year ended 30 June 2022 - Unaudited Year ended 31 December 2022 - Audited
Group Group Group
Eliminations Eliminations Eliminations
Taste & Dairy and Taste & Dairy and Taste & Dairy and
Nutrition Ireland Unallocated Total Nutrition Ireland Unallocated Total Nutrition Ireland Unallocated Total
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
External
revenue 3,521.0 600.6 - 4,121.6 3,431.2 626.6 - 4,057.8 7,387.0 1,384.9 - 8,771.9
Inter-segment
revenue 18.3 73.9 (92.2) - 13.7 68.8 (82.5) - 29.6 154.0 (183.6) -
Revenue 3,539.3 674.5 (92.2) 4,121.6 3,444.9 695.4 (82.5) 4,057.8 7,416.6 1,538.9 (183.6) 8,771.9
EBITDA* 522.8 29.2 (34.0) 518.0 515.4 38.4 (36.1) 517.7 1,220.1 70.7 (74.7) 1,216.1
Depreciation (net) (109.0) (108.1) (221.6)
Intangible asset amortisation (42.1) (42.0) (82.7)
Non-trading items 40.5 (69.5) (146.2)
Operating profit 407.4 298.1 765.6
Finance income 5.7 0.8 6.6
Finance costs (33.2) (34.9) (72.8)
Share of joint ventures' results after taxation (0.7) 1.1 (0.4)
Profit before taxation 379.2 265.1 699.0
Income taxes (21.3) (37.5) (92.5)
Profit after taxation 357.9 227.6 606.5
Attributable to:
Equity holders of the parent 358.2 227.6 606.4
Non-controlling interests (0.3) - 0.1
357.9 227.6 606.5
*EBITDA represents profit before finance income and costs, income taxes, depreciation (net
of capital grant amortisation), intangible asset amortisation, non-trading items and share
of joint ventures' results after taxation.
Revenue analysis
Disaggregation of revenue from external customers is analysed by End Use Market ('EUM'), which
is the primary market in which Kerry's products are consumed and primary geographic market.
An EUM is defined as the market in which the end consumer or customer of Kerry's product operates.
The economic factors within the EUMs of Food, Beverage and Pharma & other within the primary
geographic markets which affect the nature, amount, timing and uncertainty of revenue and
cash flows are similar.
Analysis by EUM
Half year ended 30 June 2023 - Unaudited Half year ended 30 June 2022 - Unaudited Year ended 31 December 2022 - Audited
Taste & Dairy Taste & Dairy Taste & Dairy
Nutrition Ireland Total Nutrition Ireland Total Nutrition Ireland Total
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
Food 2,329.2 563.3 2,892.5 2,271.0 578.0 2,849.0 4,925.2 1,286.2 6,211.4
Beverage 928.9 37.3 966.2 920.5 48.6 969.1 1,959.1 98.7 2,057.8
Pharma & other 262.9 - 262.9 239.7 - 239.7 502.7 - 502.7
External revenue 3,521.0 600.6 4,121.6 3,431.2 626.6 4,057.8 7,387.0 1,384.9 8,771.9
Analysis by primary geographic market
Disaggregation of revenue from external customers is analysed by geographical split:
Half year ended 30 June 2023 - Unaudited Half year ended 30 June 2022 - Unaudited Year ended 31 December 2022 -
Audited
Taste & Dairy Taste & Dairy Taste & Dairy
Nutrition Ireland Total Nutrition Ireland Total Nutrition Ireland Total
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
Republic of
Ireland 56.9 233.3 290.2 40.6 241.6 282.2 82.2 458.2 540.4
Rest of
Europe 714.5 322.4 1,036.9 688.6 303.3 991.9 1,459.8 768.8 2,228.6
Americas 1,936.4 17.7 1,954.1 1,933.8 46.8 1,980.6 4,172.2 84.0 4,256.2
APMEA 813.2 27.2 840.4 768.2 34.9 803.1 1,672.8 73.9 1,746.7
External
revenue 3,521.0 600.6 4,121.6 3,431.2 626.6 4,057.8 7,387.0 1,384.9 8,771.9
The accounting policies of the reportable segments are the same as those detailed in the Statement
of accounting policies in the 2022 Annual Report. Under IFRS 15 'Revenue from Contracts with
Customers' revenue is primarily recognised at a point in time. Revenue recorded over time
during the period was not material to the Group.
3. Non-trading items
Half year Half year Year
ended ended ended
30 June 30 June 31 Dec.
2023 2022 2022
Unaudited Unaudited Audited
Notes EUR'm EUR'm EUR'm
Global Business Services expansion (ii) (2.8) (7.3) (13.6)
Acquisition integration costs (iii) (1.1) (1.7) (20.3)
Accelerate Operational Excellence (iv) (25.1) (17.6) (49.2)
(29.0) (26.6) (83.1)
Profit/(loss) on disposal of businesses and assets (i) 69.5 (42.9) (63.1)
Tax on above 24.5 7.4 22.0
Non-trading items (net of related tax) 65.0 (62.1) (124.2)
(i) Profit/(loss) on disposal of businesses and assets
Businesses *Assets Total
30 June 2023 30 June 30 June 2023
2023
EUR'm EUR'm EUR'm
Property, plant and equipment (82.7) (1.7) (84.4)
Goodwill (189.2) - (189.2)
Brand related intangible assets (40.6) - (40.6)
Computer software (0.1) - (0.1)
Deferred tax assets - - -
Cash disposed (0.1) - (0.1)
Inventories (61.9) - (61.9)
Assets classified as held for sale - disposed - (3.8) (3.8)
Assets classified as held for sale - impaired - (10.5) (10.5)
Trade and other receivables (2.0) - (2.0)
Tax receivables - - -
Trade and other payables 17.0 - 17.0
Other non-current liabilities 7.9 - 7.9
(351.7) (16.0) (367.7)
Consideration
Cash received 363.3 11.5 374.8
Vendor loan note 125.0 - 125.0
488.3 11.5 499.8
Deferred consideration 0.5 - 0.5
Disposal related costs (59.3) (4.5) (63.8)
429.5 7.0 436.5
Cumulative exchange difference on translation recycled on disposal 0.7 - 0.7
Profit/(loss) on disposal of businesses and assets 78.5 (9.0) 69.5
Businesses *Assets Total
30 June 30 June 30 June
2023 2023 2023
Net cash inflow on disposal: EUR'm EUR'm EUR'm
Consideration 488.3 11.5 499.8
Less: cash disposed (0.1) - (0.1)
Less: disposal related costs paid (27.7) - (27.7)
Less: vendor loan note (125.0) - (125.0)
335.5 11.5 347.0
*Assets represent non-current assets and assets classified as held for
sale.
Profit/(loss) on disposal of businesses
As previously announced, the Group completed the sale of the trade and assets of its Sweet
Ingredients Portfolio during the period for a consideration of EUR483.0m comprising of an
initial cash consideration of EUR358.0m (following routine closing adjustments) plus a EUR125.0m
interest bearing vendor loan note. The operational footprint disposed consisted of four manufacturing
facilities in the US (in Illinois, Kansas, Missouri, and California), and six facilities across
the UK, the Netherlands, Germany and France. These businesses were not deemed to be discontinued
operations and goodwill was allocated to these disposed businesses using an appropriate allocation
methodology aligned with IAS 36 'Impairment of Assets'. During the period the Group also disposed
of small operations in South Africa and South Korea for a consideration of EUR5.3m. The profit
on disposal of these businesses was EUR78.5m, with the related tax credit of EUR16.8m. The
profit on disposal of these businesses includes the associated reorganisation costs in relation
to these divestments.
In 2022 the Group disposed of its operations in Russia and Belarus. These businesses were
not deemed to be discontinued operations and goodwill was allocated to these disposed businesses
using an appropriate allocation methodology aligned with IAS 36 'Impairment of Assets'. During
the year the Group also disposed of a small cereal operation in North America. The loss on
disposal of these businesses for the year end 31 December 2022 was EUR63.0m and the related
tax credit was EUR4.3m.
Profit/(loss) on disposal of assets
The Group disposed of property, plant and equipment primarily in North America and Europe
for a consideration of EUR11.5m resulting in a profit of EUR6.0m for the period ended 30 June
2023. This profit on disposal of property, plant and equipment was offset by the further impairment
of certain assets classified as held for sale based in the USA to their fair value less costs
to sell by EUR15.0m, consisting of property, plant and equipment of EUR10.5m and EUR4.5m of
estimated costs to sell. A tax credit of EUR1.5m arose on the disposal of assets for the period.
During 2022, the Group disposed of property, plant and equipment primarily in North America
and APMEA for a combined consideration of EUR51.7m resulting in a gain of EUR6.2m (30 June
2022: consideration of EUR3.2m resulting in a loss of EUR1.7m). A tax charge of EUR1.9m (30
June 2022: a tax credit of EUR0.1m) arose on the disposal of assets. In 2022, certain assets
classified as held for sale based in the USA and APMEA were impaired to their fair value less
costs to sell by EUR5.6m (30 June 2022: EURnil), consisting of EUR1.2m of property, plant
and equipment impairment, EUR2.7m of goodwill impairment, EUR1.7m of brand related intangibles
impairment and EURnil of estimated costs to sell including marketing, legal, site rectification,
environmental and other related expenses necessary to complete the disposals in 2023. The
related tax credit was EUR0.5m. In addition, in 2022 there was a specific impairment charge
of EUR0.3m and EUR0.4m in relation to goodwill and brand related intangibles respectively
recorded in intangible assets.
(ii) Global Business Services expansion
In 2020, the Group commenced a programme to evolve, migrate and expand its Global Business
Services model to better enable the business and support further growth. For the period ended
30 June 2023, the Group incurred costs of EUR2.8m (30 June 2022: EUR7.3m; 31 December 2022:
EUR13.6m) reflecting relocation of resources, advisory fees, redundancies and the streamlining
of operations. The associated tax credit was EUR0.3m (30 June 2022: EUR1.4m; 31 December 2022:
EUR3.0m).
(iii) Acquisition integration costs
These costs of EUR1.1m (30 June 2022: EUR1.7m; 31 December 2022: EUR20.3m) reflect the external
costs associated with deal preparation and due diligence. In 2022 these costs reflected the
relocation of resources, the restructuring of operations in order to integrate the acquired
businesses into the existing Kerry operating model and external costs associated with deal
preparation, integration planning and due diligence. A tax credit of EUR0.1m (30 June 2022:
EURnil; 31 December 2022: EUR4.5m) arose due to tax deductions available on acquisition related
costs.
(iv) Accelerate Operational Excellence
These costs of EUR25.1m (30 June 2022: EUR17.6m; 31 December 2022: EUR49.2m) predominantly
reflect consultancy fees, project management costs and costs of streamlining operations incurred
in the period relating to our Accelerate Operational Excellence transformation programme,
which will run until 2024. This material transformation project deploying next generation
manufacturing processes, including advanced process controls, is combined with building capabilities
within the Group to enhance continuous improvement in manufacturing processes which will deliver
step change manufacturing excellence across the organisation. This project will also focus
on supply chain excellence, optimising the Group's warehousing and distribution network. A
tax credit of EUR5.8m (30 June 2022: EUR4.9m; 31 December 2022: EUR11.6m) arose due to tax
deductions available on accelerated operational excellence costs.
4. Finance income and costs
Half year Half year Year
ended ended ended
30 June 2023 30 June 2022 31 Dec. 2022
Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Finance income:
Interest income on
deposits 3.4 0.8 6.6
Interest income on
vendor loan note 2.3 - -
5.7 0.8 6.6
Finance costs:
Interest payable and
finance charges (34.1) (33.7) (70.9)
Interest on lease
liabilities (0.9) (1.9) (3.4)
Interest rate derivative 0.2 0.1 0.4
(34.8) (35.5) (73.9)
Net interest income on
retirement benefits
obligation 1.6 0.6 1.1
Finance costs (33.2) (34.9) (72.8)
5. Earnings per A
ordinary share
Half year Half year Year
ended ended ended
30 June 2023 30 June 2022 31 Dec. 2022
Unaudited Unaudited Audited
EPS EPS EPS
cent EUR'm cent EUR'm cent EUR'm
Basic earnings per share
Profit after taxation attributable to equity holders of
the parent 201.7 358.2 128.4 227.6 341.9 606.4
Diluted earnings per
share
Profit after taxation attributable to equity holders of
the parent 201.5 358.2 128.2 227.6 341.3 606.4
30 June 2023 30 June 2022 31 Dec. 2022
Unaudited Unaudited Audited
Number of Shares m's m's m's
Basic weighted average number of shares 177.6 177.3 177.4
Impact of share options outstanding 0.2 0.2 0.3
Diluted weighted average number of shares 177.8 177.5 177.7
6. Dividends
Half year Half year Year
ended ended ended
30 June 2023 30 June 2022 31 Dec. 2022
Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Amounts recognised as distributions to equity
shareholders in the period
Final 2022 dividend of 73.40 cent per A ordinary share
paid 12 May 2023
(Final 2021 dividend of 66.70 cent per A ordinary share
paid 6 May 2022) 130.0 118.0 118.0
Interim 2022 dividend of 31.40 cent per A ordinary share
paid 11 November 2022 - - 55.6
130.0 118.0 173.6
Since the end of the period, the Board has declared an interim dividend of 34.60 cent per
A ordinary share which amounts to EUR61.3m. The payment date for the interim dividend will
be 10 November 2023 to shareholders registered on the record date as at 13 October 2023. The
Condensed Consolidated Interim Financial Statements do not reflect this dividend.
7. Other non-current
financial instruments
Half year Half year Year
ended ended ended
30 June 2023 30 June 2022 31 Dec. 2022
Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Vendor loan note 125.0 - -
Forward foreign exchange
contracts 0.7 2.7 0.3
Total other non-current
financial instruments 125.7 2.7 0.3
As of 30 June 2023, the Group holds an interest bearing vendor loan note which was entered
into as part of the consideration for the sale of the trade and assets of the Sweet Ingredients
Portfolio from the Taste & Nutrition segment (note 3). The carrying amount of the debt receivable
is EUR125.0m, this represents the amount due from third parties and is initially recognised
at fair value. As the Group objective for the vendor loan note is to collect the contractual
cash flows when due, the Group measures at amortised cost using the effective interest method
subsequent to initial recognition.
8. Assets and liabilities classified as held for sale
At 30 June 2023, the Group held certain property, plant and equipment classified as held for
sale in the Taste & Nutrition segment in Europe and North America. These assets have been
impaired by EUR15.0m representing their fair value less costs to sell (note 3).
At 31 December 2022, the Group had net assets classified as held for sale of EUR368.3m. In
March 2023, the Group disposed of its Sweet Ingredients Portfolio from the Taste & Nutrition
segment, for a consideration of EUR483.0m comprising of an initial cash consideration of EUR358.0m
(following routine closing adjustments, see note 3) plus a EUR125.0m interest bearing vendor
loan note. These businesses were not deemed to be discontinued operations and goodwill was
allocated to these disposed businesses using an appropriate allocation methodology aligned
with IAS 36 'Impairment of Assets'.
At 30 June 2022, the Group held certain property, plant and equipment classified as held for
sale in the Taste & Nutrition segment in Europe and North America. In addition, the Group
classified the Taste & Nutrition businesses located in Russia and Belarus as assets held for
sale during the period, the residual fair value of these assets on the Condensed Consolidated
Balance Sheet was EURnil.
The major classes of assets and liabilities comprising the operations classified as held for
sale are outlined in the table below:
Half year Half year Year
ended ended ended
30 June 2023 30 June 2022 31 Dec. 2022
Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Assets classified as
held for sale
Property, plant and
equipment 0.6 22.4 100.8
Goodwill - - 191.1
Brand related intangible
assets - - 42.3
Inventories - - 53.1
Trade and other
receivables - - 0.7
Total assets classified
as held for sale 0.6 22.4 388.0
Trade and other payables - - (19.7)
Total liabilities directly associated with assets
classified as held for sale - - (19.7)
Net assets classified as
held for sale* 0.6 22.4 368.3
*The analysis in the table above excludes any transaction and other attributable
costs.
9. Retirement benefits
obligation
The net surplus/(deficit) recognised in the Condensed Consolidated Balance Sheet for the Group's
defined benefit post-retirement schemes was as follows:
Schemes Schemes
in Surplus in Deficit Total
Half year Half year Half year
ended ended ended
30 June 2023 30 June 2023 30 June 2023
Unaudited Unaudited Unaudited
EUR'm EUR'm EUR'm
Net recognised
surplus/(deficit)
before deferred tax 96.2 (53.1) 43.1
Net related deferred tax
(liability)/asset (12.0) 13.0 1.0
Net recognised
surplus/(deficit) after
deferred tax 84.2 (40.1) 44.1
At 30 June 2023, the net surplus before deferred tax for defined benefit post-retirement schemes
was EUR43.1m (30 June 2022: EUR201.8m; 31 December 2022: EUR65.4m). This was calculated by
rolling forward the defined benefit post-retirement schemes' liabilities at 31 December 2022
to reflect material movements in underlying assumptions over the period while the defined
benefit post-retirement schemes' assets at 30 June 2023 are measured at market value. The
reduction in the net surplus before deferred tax of EUR22.3m was driven by lower asset values
which were partially offset by favourable movements in financial assumptions.
The surplus at 30 June 2023 and 31 December 2022 relates to the Irish scheme, while the surplus
at 30 June 2022 relates to both the Irish and UK schemes. The surplus has been recognised
in accordance with IFRIC 14 'The Limit on a Defined Benefit Asset, Minimum Funding Requirements
and their Interaction' as it has been determined that the Group has an unconditional right
to a refund of the surplus.
Schemes Schemes
in Surplus in Deficit Total
Half year Half year Half year
ended ended ended
30 June 2022 30 June 2022 30 June 2022
Unaudited Unaudited Unaudited
EUR'm EUR'm EUR'm
Net recognised
surplus/(deficit)
before deferred tax 221.6 (19.8) 201.8
Net related deferred tax
(liability)/asset (42.8) 5.1 (37.7)
Net recognised
surplus/(deficit) after
deferred tax 178.8 (14.7) 164.1
Schemes Schemes
in Surplus in Deficit Total
year ended year ended year ended
31 Dec. 2022 31 Dec. 2022 31 Dec. 2022
Audited Audited Audited
EUR'm EUR'm EUR'm
Net recognised
surplus/(deficit)
before deferred tax 95.6 (30.2) 65.4
Net related deferred tax
(liability)/asset (11.9) 7.3 (4.6)
Net recognised
surplus/(deficit) after
deferred tax 83.7 (22.9) 60.8
10. Financial
instruments
i) The following table outlines the financial assets and liabilities in relation to net debt
held by the Group at the Balance Sheet date:
Liabilities Derivatives
Financial at Fair Designated as Assets/
Value
Assets/(Liabilities) through Hedging (Liabilities)
Profit at
at Amortised Cost or Loss Instruments FVOCI Total
EUR'm EUR'm EUR'm EUR'm EUR'm
Assets:
Interest rate swaps - - - - -
Cash at bank and in hand 660.8 - - - 660.8
660.8 - - - 660.8
Liabilities:
Interest rate swaps - - (15.9) - (15.9)
Bank overdrafts - - - - -
Bank loans 1.5 - - - 1.5
Senior Notes (2,441.8) 12.5 - - (2,429.3)
Borrowings and
overdrafts (2,440.3) 12.5 - - (2,427.8)
Net debt - pre lease
liabilities (1,779.5) 12.5 (15.9) - (1,782.9)
Lease liabilities (63.6) - - - (63.6)
Net debt at 30 June 2023
- unaudited (1,843.1) 12.5 (15.9) - (1,846.5)
Assets:
Interest rate swaps - - 38.0 - 38.0
Cash at bank and in hand 757.2 - - - 757.2
757.2 - 38.0 - 795.2
Liabilities:
Interest rate swaps - - (17.4) - (17.4)
Bank overdrafts (13.0) - - - (13.0)
Bank loans (2.7) - - - (2.7)
Senior Notes (3,154.6) 4.4 - - (3,150.2)
Borrowings and
overdrafts (3,170.3) 4.4 - - (3,165.9)
Net debt - pre lease
liabilities (2,413.1) 4.4 20.6 - (2,388.1)
Lease liabilities (68.2) - - - (68.2)
Net debt at 30 June 2022
- unaudited (2,481.3) 4.4 20.6 - (2,456.3)
Assets:
Interest rate swaps - - 37.0 - 37.0
Cash at bank and in hand 970.0 - - - 970.0
970.0 - 37.0 - 1,007.0
Liabilities:
Interest rate swaps - - (21.5) - (21.5)
Bank overdrafts (0.2) - - - (0.2)
Bank loans (1.7) - - - (1.7)
Senior Notes (3,144.3) 12.5 - - (3,131.8)
Borrowings and
overdrafts (3,146.2) 12.5 - - (3,133.7)
Net debt - pre lease
liabilities (2,176.2) 12.5 15.5 - (2,148.2)
Lease liabilities (69.2) - - - (69.2)
Net debt at 31 December
2022 - audited (2,245.4) 12.5 15.5 - (2,217.4)
All Group borrowings and overdrafts and interest rate swaps are guaranteed by Kerry Group
plc. No assets of the Group have been pledged to secure these items.
In April 2023 the Group repaid in full US$750m of its 2023 US$ Senior Notes issued in 2013.
US$250m of these public notes were swapped from US dollar fixed to euro fixed using cross
currency interest rate swaps which were closed out at the time of the repayment. The repayment
was funded from existing cash resources of the Group.
In June 2023 the Group amended and restated it's revolving credit facility, the undrawn facility
has increased from EUR1,100m to EUR1,500m with a new maturity date of June 2028. The facility
contains two 1-year extension options, exercisable on the 1st and 2nd anniversaries of the
facility and which, if exercised, would extend the maturity date of the facility to June 2030.
As at 30 June 2023, the Group's debt portfolio included:
- EUR750m of Senior Notes issued in 2015 and EUR200m issued in April 2020 as a tap onto the
original issuance (the 2025 Senior Notes). EUR175m of the issuance in 2015 were swapped, using
cross currency swaps, to US dollar;
- EUR750m of Senior Notes issued in 2019 (the 2029 Senior Notes); and
- EUR750m of euro sustainability-linked bond notes issued in 2021 (the 2031 SLB Senior Notes).
No interest rate derivatives were entered into for the 2029 Senior Notes and 2031 SLB Senior
Notes issuances.
The adjustment to Senior Notes classified under liabilities at fair value through profit or
loss of EUR12.5m (30 June 2022: EUR4.4m debit; 31 December 2022: EUR12.5m debit) represents
the part adjustment to the carrying value of debt from applying fair value hedge accounting
for interest rate risk. This amount is primarily offset by the fair value adjustment on the
corresponding hedge items being the underlying cross currency interest rate swaps.
ii) The Group's exposure to interest rates on financial assets and liabilities are detailed
in the table below including the impact of cross currency swaps ('CCS') on the currency profile
of net debt:
Total Pre Impact of Total after Half year Year
CCS CCS CCS ended ended
Half year Half year Half year 30 June 2022 31 Dec. 2022
ended ended ended Unaudited Audited
30 June 30 June 2023 30 June 2023 EUR'm EUR'm
2023 Unaudited Unaudited
Unaudited EUR'm EUR'm
EUR'm
Euro (2,265.6) 175.0 (2,090.6) (2,371.5) (2,177.8)
Sterling 88.5 - 88.5 65.8 59.1
US Dollar 179.6 (175.0) 4.6 (254.1) (279.2)
Other 151.0 - 151.0 103.5 180.5
(1,846.5) - (1,846.5) (2,456.3) (2,217.4)
iii) The following table details the maturity profile of the Group's net debt:
On demand & Up to 2 - 5
up to 1 2 years years > 5 years Total
year EUR'm EUR'm EUR'm EUR'm
EUR'm
Cash at bank and in hand 660.8 - - - 660.8
Interest rate swaps - - (15.9) - (15.9)
Bank overdrafts - - - - -
Bank loans (1.3) - 2.8 - 1.5
Senior Notes - - (941.3) (1,488.0) (2,429.3)
Net debt - pre lease liabilities 659.5 - (954.4) (1,488.0) (1,782.9)
Lease liabilities (discounted) (31.8) (11.8) (13.0) (7.0) (63.6)
At 30 June 2023 - unaudited 627.7 (11.8) (967.4) (1,495.0) (1,846.5)
Cash at bank and in hand 757.2 - - - 757.2
Interest rate swaps 36.3 - (15.7) - 20.6
Bank overdrafts (13.0) - - - (13.0)
Bank loans (0.1) (2.6) - - (2.7)
Senior Notes (711.1) - (952.8) (1,486.3) (3,150.2)
Net debt - pre lease liabilities 69.3 (2.6) (968.5) (1,486.3) (2,388.1)
Lease liabilities (discounted) (25.7) (18.3) (19.7) (4.5) (68.2)
At 30 June 2022 - unaudited 43.6 (20.9) (988.2) (1,490.8) (2,456.3)
Cash at bank and in hand 970.0 - - - 970.0
Interest rate swaps 35.4 - (19.9) - 15.5
Bank overdrafts (702.6) - - - (702.6)
Bank loans - - - - -
Senior Notes 1.5 (1.7) (943.7) (1,487.2) (2,431.1)
Net debt - pre lease liabilities 304.3 (1.7) (963.6) (1,487.2) (2,148.2)
Lease liabilities (discounted) (26.9) (15.6) (21.6) (5.1) (69.2)
At 31 December 2022 - audited 277.4 (17.3) (985.2) (1,492.3) (2,217.4)
At 30 June 2023, the Group had cash on hand of EUR660.8m. At the period end, the Group had
an undrawn committed Syndicate revolving credit facility of EUR1,500m. Cash at bank and in
hand includes an amount of EUR102.6m held on short-term deposit of which EUR50.0m was held
under a Sustainable Deposits programme.
iv) Fair value of financial instruments:
a) Fair value of financial instruments carried at fair value
Financial instruments recognised at fair value are analysed between those based on:
* quoted prices in active markets for identical assets
or liabilities (Level 1);
* those involving inputs other than quoted prices
included in Level 1 that are observable for the
assets or liabilities, either directly (as prices) or
indirectly (derived from prices) (Level 2); and
* those involving inputs for the assets or liabilities
that are not based on observable market data
(unobservable inputs) (Level 3).
The following table sets out the fair value of financial instruments carried at fair value:
Fair Value 30 June 30 June 2022 31 Dec.
2023 2022
Hierarchy Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Financial assets
Interest rate swaps: Current Level 2 - 38.0 37.0
Forward foreign exchange
contracts: Non-current Level 2 0.7 2.7 0.3
Current Level 2 19.3 70.3 22.5
Financial asset
investments: Fair value through profit or loss Level 1 42.8 43.1 43.8
Fair value through other comprehensive
income Level 3 12.1 9.3 15.1
Financial liabilities
Interest rate swaps: Non-current Level 2 (15.9) (15.7) (19.9)
Current Level 2 - (1.7) (1.6)
Forward foreign exchange
contracts: Non-current Level 2 (0.2) (1.1) (0.4)
Current Level 2 (8.5) (106.9) (16.8)
There have been no transfers between levels during the current or prior financial period.
b) Fair value of financial instruments
carried at amortised cost
Except as defined in the following table, it is considered that the carrying amounts of financial
assets and financial liabilities recognised at amortised cost in the Condensed Consolidated
Interim Financial Statements approximate their fair values.
Carrying Fair Carrying Fair Carrying Fair
Amount Value Amount Value Amount Value
30 June 30 June 30 June 30 June 31 Dec. 31 Dec.
2023 2023 2022 2022 2022 2022
Fair Value Unaudited Unaudited Unaudited Unaudited Audited Audited
Hierarchy EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
Financial liabilities Level 2 (2,441.8) (2,104.9) (3,154.6) (2,829.5) (3,144.3) (2,761.4)
Senior Notes - Public
c) Valuation principles
The fair value of financial assets and liabilities are determined as follows:
- assets and liabilities with standard terms and conditions which are traded on active liquid
markets are determined with reference to quoted market prices. This includes equity investments;
- other financial assets and liabilities (excluding derivatives) are determined in accordance
with generally accepted pricing models based on discounted cash flow analysis using prices
from observable current market transactions and dealer quotes for similar instruments. This
includes interest rate swaps and forward foreign exchange contracts which are determined by
discounting the estimated future cash flows;
- the fair values of financial instruments that are not based on observable market data (unobservable
inputs) requires entity specific valuation techniques; and
- derivative financial instruments are calculated using quoted prices. Where such prices are
not available, a discounted cash flow analysis is performed using the applicable yield curve
for the duration of the instruments. Forward foreign exchange contracts are measured using
quoted forward exchange rates and yield curves derived from quoted interest rates adjusted
for counterparty credit risk, which is calculated based on credit default swaps of the respective
counterparties. Interest rate swaps are measured at the present value of future cash flows
estimated and discounted based on the applicable yield curves derived from quoted interest
rates adjusted for counterparty credit risk, which is calculated based on credit default swaps
of the respective counterparties.
Net debt reconciliation
Cash at Interest Overdrafts Borrowings Borrowings Net Debt
bank and Rate due within due within due after - pre lease Lease Net
in hand Swaps 1 year* 1 year* 1 year* liabilities liabilities* Debt
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
At 31 December 2021 -
audited 1,039.1 34.6 (5.3) (0.3) (3,118.0) (2,049.9) (74.2) (2,124.1)
Cash flows (300.0) - (7.4) (0.1) - (307.5) 15.9 (291.6)
Foreign exchange
adjustments 18.1 4.4 (0.3) (50.2) (0.4) (28.4) (4.1) (32.5)
Other non-cash movements - (18.4) - (660.6) 676.7 (2.3) (5.8) (8.1)
At 30 June 2022 - unaudited 757.2 20.6 (13.0) (711.2) (2,441.7) (2,388.1) (68.2) (2,456.3)
Cash flows 224.0 - 12.4 0.4 0.7 237.5 19.2 256.7
Foreign exchange
adjustments (11.2) (0.9) 0.4 10.3 0.1 (1.3) 1.5 0.2
Other non-cash movements - (4.2) - (0.4) 8.3 3.7 (21.7) (18.0)
At 31 December 2022 -
audited 970.0 15.5 (0.2) (700.9) (2,432.6) (2,148.2) (69.2) (2,217.4)
Cash flows (294.9) (34.5) 0.2 688.3 4.5 363.6 17.4 381.0
Foreign exchange
adjustments (14.3) 1.4 - 12.9 (0.3) (0.3) 1.3 1.0
Other non-cash movements - 1.7 - (1.6) 1.9 2.0 (13.1) (11.1)
At 30 June 2023 - unaudited 660.8 (15.9) - (1.3) (2,426.5) (1,782.9) (63.6) (1,846.5)
*Liabilities from financing
activities.
11. Business combinations
The following acquisition was completed by the Group during the period to 30 June 2023:
Completion Percentage
Acquisition Type date acquired Segment Principal activity Strategic rationale
Proexcar Equity May 2023 100% share Taste & A producer of leading natural Strengthens Kerry's capabilities and
S.A.S. acquisition Nutrition functional systems technologies, leading position within the Latin
which can deliver clean label American meat market,
solutions into protein while also providing a platform for
applications based in Colombia. further strategic growth within the
ANDEAN Region.
The table below provides details of the identifiable net assets, including adjustments to
provisional fair values, in respect of the acquisition completed during the period to 30 June
2023:
Half year
ended
30 June 2023
Unaudited
EUR'm
Recognised amounts of identifiable assets acquired and liabilities assumed:
Non-current assets
Property, plant and equipment 9.9
Brand related intangibles 9.5
Current assets
Cash at bank and in hand 0.2
Inventories 3.4
Trade and other receivables 4.3
Current liabilities
Trade and other payables (6.1)
Other current liabilities (2.1)
Non-current liabilities
Deferred tax liabilities (3.5)
Other non-current liabilities (2.5)
Total identifiable assets 13.1
Goodwill 34.4
Total consideration 47.5
Satisfied by:
Cash 40.4
Deferred payment* 7.1
47.5
*A potential additional payment of up to EUR16.8m (US$18m) payable in 2025 based on achieving
earn-out conditions. The EUR7.1m represents the fair value of the expected deferred payment.
Net cash outflow on acquisition:
Half year
ended
30 June 2023
Unaudited
EUR'm
Cash 40.4
Less: cash and cash equivalents acquired (0.2)
Plus: debt acquired (included in other current liabilities above) 1.3
41.5
The acquisition method of accounting has been used to consolidate the business acquired in
the Group's Condensed Consolidated Interim Financial Statements. Given that the valuation
of the fair value of assets and liabilities recently acquired is still in progress, some of
the values in the previous table are determined provisionally. For the acquisitions completed
in 2022, to date, there have been no material revisions of the provisional fair value adjustments
since the initial values were established. The Group performs quantitative and qualitative
assessments of each acquisition in order to determine whether it is material for the purposes
of separate disclosure under IFRS 3 'Business Combinations'.
The goodwill is attributable to the expected profitability, revenue growth, future market
development and assembled workforce of the acquired business and the synergies expected to
arise within the Group after the acquisition. None of the goodwill recognised is expected
to be deductible for income tax purposes.
Transaction expenses related to this acquisition of EUR0.2m were charged in the Group's Condensed
Consolidated Income Statement during the financial period. The fair value of the financial
assets includes trade and other receivables with a fair value of EUR4.3m and a gross contractual
value of EUR5.0m .
The revenue and profit after taxation attributable to owners of the parent to the Group contributed
from date of acquisition for all business combinations effected during the period is as follows:
Half year
ended
30 June 2023
Unaudited
EUR'm
Revenue 1.6
Profit after taxation attributable to equity holders of the parent -
The revenue and profit after taxation attributable to equity holders of the parent to the
Group determined in accordance with IFRS as though the acquisition date for all business combinations
effected during the period had been the beginning of that period would be as follows:
Kerry Group Consolidated
excluding Group
2023 2023 including
acquisition acquisition acquisition
Unaudited Unaudited Unaudited
EUR'm EUR'm EUR'm
Revenue 9.1 4,120.0 4,129.1
Profit after taxation attributable to equity holders of the parent 0.2 358.2 358.4
12. Share capital
Half year Half year Year
ended ended ended
30 June 30 June 31 Dec.
2023 2022 2022
Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Authorised
280,000,000 A ordinary shares of 12.50 cent each 35.0 35.0 35.0
Allotted, called-up and fully paid (A ordinary shares of 12.50 cent each)
At beginning of the financial period 22.1 22.1 22.1
Shares issued during the financial period - - -
At end of the financial period 22.1 22.1 22.1
Kerry Group plc has one class of ordinary share which carries no right to fixed income.
Shares issued during the period
During the period a total of 112,080 A ordinary shares, each with a nominal value of 12.50
cent, were issued at nominal value per share under the Long-Term and Short-Term Incentive
Plans.
The total number of shares in issue at 30 June 2023 was 177,098,561 (30 June 2022: 176,941,764;
31 December 2022: 176,986,481).
13. Events after the Balance Sheet date
Since the period end, the Group has declared an interim dividend of 34.60 cent per A ordinary
share (see note 6).
On 31 July 2023 the Group acquired 100% of the shares of Shanghai Greatang Orchard Food Co.,
Ltd. based in China for an initial consideration of EUR91.1m* (RMB 720m) subject to routine
closing adjustments, with potential additional payments of up to EUR98.7m* (RMB 780m) payable
in tranches annually from 2024 to 2026 based on achieving earn-out conditions. While the fair
value exercise has been initiated, due to the recent nature of this transaction the outcome
will be reported as part of our 2023 full year results in February 2024.
*Exchange rate of RMB 7.90:EUR1.
There have been no other significant events, outside of the ordinary course of business, affecting
the Group since 30 June 2023.
14. General information
These unaudited Condensed Consolidated Interim Financial Statements for the half year ended
30 June 2023 are not full financial statements and were not reviewed or audited by the Group's
auditors, PricewaterhouseCoopers (PwC). These Condensed Consolidated Interim Financial Statements
were approved by the Board of Directors and authorised for issue on 1 August 2023. The figures
disclosed relating to 31 December 2022 have been derived from the Consolidated Financial Statements
which were audited, received an unqualified audit report and have been filed with the Registrar
of Companies. This report should be read in conjunction with the 2022 Annual Report which
was prepared in accordance with IFRS adopted by the European Union ('EU') which comprise standards
and interpretations approved by the International Accounting Standards Board ('IASB'). The
Group financial statements comply with Article 4 of the EU IAS Regulation. IFRS adopted by
the EU differs in certain respects from IFRS issued by the IASB. References to IFRS refer
to IFRS adopted by the EU. The accounting policies applied by the Group in these Condensed
Consolidated Interim Financial Statements are the same as those detailed in the 2022 Annual
Report.
These unaudited Condensed Consolidated Interim Financial Statements have been prepared on
the going concern basis of accounting as set out in note 1. The Directors report that they
have satisfied themselves that the Group is a going concern, having adequate resources to
continue in operational existence for the foreseeable future. In forming this view, the Directors
have reviewed the Group's budget for a period not less than 12 months, the five year medium-term
plan and have taken into account the cash flow implications of the plans, including proposed
capital expenditure, and compared these with the Group's committed borrowing facilities and
projected gearing ratios.
In relation to seasonality, EBITDA is lower in the first half of the year due to the nature
of the food business and stronger trading in the second half. While revenue is relatively
evenly spread, margin has traditionally been higher in the second half of the year due to
product mix and the timing of promotional activity. There is also a material change to the
levels of working capital between December and June mainly due to the seasonal nature of the
dairy and crop-based businesses.
As permitted by the Transparency (Directive 2004/109/EC) Regulations 2007 this Interim Report
is available on www.kerry.com. However, if a physical copy is required, please contact the
Corporate Affairs department.
FINANCIAL DEFINITIONS
1. Revenue
Volume growth
This represents the sales growth period-on-period, excluding pass-through pricing on input
costs, currency impacts, acquisitions, disposals and rationalisation volumes.
Volume growth is an important metric as it is seen as the key driver of organic top-line business
improvement. Pricing impacts revenue growth positively or negatively depending on whether
inputs move up or down. A full reconciliation to reported revenue performance is detailed
in the revenue reconciliation below.
Revenue Reconciliation
Volume Transaction Translation Reported
H1 2023 performance Price currency Acquisitions Disposals currency performance
Taste & Nutrition 1.4% 5.4% - 1.3% (5.3%) (0.1%) 2.7%
Dairy Ireland (2.5%) 0.4% (0.1%) - - (0.8%) (3.0%)
Group 0.6% 4.5% - 1.1% (4.5%) (0.1%) 1.6%
H1 2022
Taste & Nutrition 8.6% 5.9% 0.2% 6.3% (0.5%) 7.0% 27.5%
Dairy Ireland* 1.2% 15.4% 0.1% - (46.1%) 1.9% (27.5%)
Group 6.8% 8.3% 0.1% 4.7% (12.4%) 5.8% 13.3%
*Within the Dairy Ireland H1 2022 base comparatives are the results of the Consumer Foods
Meats and Meals business which was disposed by the Group on 27 September 2021.
2. EBITDA
EBITDA represents profit before finance income and costs, income taxes, depreciation (net
of capital grant amortisation), intangible asset amortisation, non-trading items and share
of joint ventures' results after taxation. EBITDA is reflective of underlying trading performance
and allows comparison of the trading performance of the Group's businesses, either period-on-period
or with other businesses.
H1 2023 H1 2022
EUR'm EUR'm
Profit after taxation 357.9 227.6
Share of joint ventures' results after taxation 0.7 (1.1)
Finance income (5.7) (0.8)
Finance costs 33.2 34.9
Income taxes 21.3 37.5
Non-trading items (40.5) 69.5
Intangible asset
amortisation 42.1 42.0
Depreciation (net) 109.0 108.1
EBITDA 518.0 517.7
3. EBITDA Margin
EBITDA margin represents EBITDA expressed as a percentage of revenue.
H1 2023 H1 2022
EUR'm EUR'm
EBITDA 518.0 517.7
Revenue 4,121.6 4,057.8
EBITDA margin 12.6% 12.8%
4. Operating Profit
Operating profit is profit before income taxes, finance income, finance costs and share of
joint ventures' results after taxation.
H1 2023 H1 2022
EUR'm EUR'm
Profit before taxation 379.2 265.1
Finance income (5.7) (0.8)
Finance costs 33.2 34.9
Share of joint ventures' results after taxation 0.7 (1.1)
Operating profit 407.4 298.1
5. Adjusted Earnings Per Share and Performance in Adjusted Earnings Per Share on a Constant
Currency Basis
The performance in adjusted earnings per share on a constant currency basis is provided as
it is considered more reflective of the Group's underlying trading performance. Adjusted earnings
is profit after taxation attributable to equity holders of the parent before brand related
intangible asset amortisation and non-trading items (net of related tax). These items are
excluded in order to assist in the understanding of underlying earnings. A full reconciliation
of adjusted earnings per share to basic earnings is provided below. Constant currency eliminates
the translational effect that arises from changes in foreign currency period-on-period. The
performance in adjusted earnings per share on a constant currency basis is calculated by comparing
current period adjusted earnings per share to the prior period adjusted earnings per share
retranslated at current period average exchange rates.
H1 2023 H1 2022
EPS Performance EPS Performance
cent % cent %
Basic earnings per share 201.7 57.1% 128.4 0.2%
Brand related intangible asset amortisation 14.9 - 13.0 -
Non-trading items (net of related tax) (36.6) - 35.0 -
Adjusted earnings per share 180.0 2.0% 176.4 16.1%
Impact of retranslating prior period adjusted earnings per share at current period
average
exchange rates* 0.1% (7.1%)
Growth in adjusted earnings per share on a constant currency basis 2.1% 9.0%
*Impact of H1 2023 translation was 0.2/176.4 cent = 0.1% (H1 2022: (7.1%)).
6. Free Cash Flow
Free cash flow is EBITDA plus movement in average working capital, capital expenditure net
(purchase of assets, payment of lease liabilities, proceeds from the sale of assets (net of
disposal expenses) and capital grants received), pensions contributions paid less pension
expense, finance costs paid (net) and income taxes paid.
Free cash flow is seen as an important indicator of the strength and quality of the business
and of the availability to the Group of funds for reinvestment or for return to shareholders.
Movement in average working capital is used when calculating free cash flow as management
believes this provides a more accurate measure of the increase or decrease in working capital
needed to support the business over the course of the period rather than at two distinct points
in time and more accurately reflects fluctuations caused by seasonality and other timing factors.
Average working capital is the sum of each month's working capital over 6 months adjusted
for the impact of acquisitions and disposals. Below is a reconciliation of free cash flow
to the nearest IFRS measure, which is 'Net cash from operating activities'.
H1 2023 H1 2022
EUR'm EUR'm
Net cash from operating activities 309.7 132.2
Difference between movement in monthly average working capital and movement in the period
end working capital (13.5) 113.8
Payments on non-trading
items 39.5 36.1
Purchase of assets (99.8) (61.3)
Payment of lease
liabilities (17.4) (15.9)
Proceeds from the sale of assets (net of disposal expenses) 11.5 3.2
Capital grants received - -
Exchange translation
adjustment 1.9 17.9
Free cash flow 231.9 226.0
7. Cash Conversion
Cash conversion is defined as free cash flow, expressed as a percentage of adjusted earnings
after taxation. Cash conversion is an important metric as it measures how much of the Group's
adjusted earnings is converted into cash.
H1 2023 H1 2022
EUR'm EUR'm
Free cash flow 231.9 226.0
Profit after taxation attributable to equity holders of the parent 358.2 227.6
Brand related intangible asset amortisation 26.5 23.1
Non-trading items (net of related tax) (65.0) 62.1
Adjusted earnings after taxation 319.7 312.8
Cash conversion 73% 72%
8. Liquidity Analysis
The Net debt: EBITDA and EBITDA: Net interest ratios disclosed are calculated using an adjusted
EBITDA, adjusted finance costs (net of finance income) and an adjusted net debt value to adjust
for the impact of non-trading items, acquisitions net of disposals and deferred payments in
relation to acquisitions.
H1 2023 H1 2022
Times Times
Net debt: EBITDA 1.6 2.1
EBITDA: Net interest 19.0 16.0
9. Average Capital Employed
Average capital employed is calculated by taking an average of the equity attributable to
equity holders of the parent and net debt over the last three reported Balance Sheets.
H1 2023 2022 H1 2022 2021 H1 2021
EUR'm EUR'm EUR'm EUR'm EUR'm
Equity attributable to equity holders of the parent 6,356.5 6,221.9 6,088.7 5,601.2 4,963.1
Net debt 1,846.5 2,217.4 2,456.3 2,124.1 1,980.6
Total capital employed 8,203.0 8,439.3 8,545.0 7,725.3 6,943.7
Average capital employed 8,395.8 8,236.5 7,738.0
10. Return on Average Capital Employed (ROACE)
This measure is defined as profit after taxation attributable to equity holders of the parent
before non-trading items (net of related tax), brand related intangible asset amortisation
and finance income and costs expressed as a percentage of average capital employed. ROACE
is a key measure of the return the Group achieves on its investment in capital expenditure
projects, acquisitions and other strategic investments.
12 months to 12 months to
H1 2023 H1 2022 FY 2022
EUR'm EUR'm EUR'm
Profit after taxation attributable to equity holders of the parent 737.0 763.6 606.4
Non-trading items (net of related tax) (2.9) (92.1) 124.2
Brand related intangible asset amortisation 54.3 46.9 50.9
Net finance costs 59.6 69.8 66.2
Adjusted profit 848.0 788.2 847.7
Average capital employed 8,395.8 7,738.0 8,236.5
Return on average capital employed 10.1% 10.2% 10.3%
11. Net Debt
Net debt comprises borrowings and overdrafts, interest rate derivative financial instruments,
lease liabilities and cash at bank and in hand. See full reconciliation of net debt in note
10 of these Condensed Consolidated Interim Financial Statements.
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END
IR KZGGRRMGGFZM
(END) Dow Jones Newswires
August 02, 2023 02:00 ET (06:00 GMT)
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