Taste & Nutrition delivered volume growth across all regions and Consumer Foods achieved volume growth across the business.
Group trading profit increased by 9.8% to €875.5m ($995.5m). This represented trading profit margin expansion of 40bps, driven by the recovery of operating leverage, portfolio mix and net contribution of acquisitions and disposals, partially offset by pricing, supply chain oncosts and KerryExcel investments.
The group’s EBITDA of €1.1bn ($1.25bn) represents a margin of 14.7%.
Constant currency adjusted earnings per share increased by 12.1% to 380.8 cent (2020: 9.4% decrease). Basic earnings per share increased to 430.6 cent (2020: 313.0 cent). The board recommended a final dividend of 66.7 cent per share, an increase of 10.1% on the final 2020 dividend. Together with the interim dividend of 28.5 cent per share, this brings the total dividend for the year to 95.2 cent, an increase of 10.1% on 2020.
Net capital expenditure amounted to €315m/$358m (2020: €311m/$354m) and research and development expenditure was €297m/$338m (2020: €282m/$321m) as the group invested in its strategic priorities of taste, nutrition and emerging markets. The group achieved free cash flow of €566m/$643m (2020: €412m/$468m) representing cash conversion of 84% in the year.
Strategic portfolio developments
Kerry announced strategic developments with acquisitions.
In the area of food waste – specifically in food protection and preservation, the company completed the acquisition of Niacet, which provides technologies for food protection and preservation. It also completed the bolt-on acquisition of National Vinegar Co., adding further fermentation capacity and supporting the group’s growth strategy in natural preservation.
Under Health & Bio-Pharma, Kerry acquired Biosearch, and agreement was reached for the acquisition of Natreon.
Kerry said it enhanced its biotechnology capabilities with the acquisition of Enmex, an enzyme manufacturer in Mexico, and reached agreement to acquire c. 92% of the issued share capital of c-LEcta, a German company specializing in precision fermentation, optimised bio-processing and bio-transformation for the creation of high-value targeted enzymes and ingredients.
Kerry also acquired Afribon, a producer of flavors for food and beverage applications. Since year end, Kerry agreed to acquire Almer, a dairy taste business based in Johor Bahru, Malaysia.
During the year Kerry also completed the disposal of its consumer foods meats and meals business to Pilgrim’s Pride.
Taste & Nutrition
Taste & Nutrition reported revenue increased by 9.0% to €6.3bn ($7.16bn) in the year. This reflected volume growth of 8.3%, increased pricing of 1.3% and contribution from acquisitions net of disposals of 2.1%, partially offset by the impact of adverse translation currency of 2.7%.
Revenue in the region increased by 4.9% to €3.2bn ($3.64bn) in the year. Kerry said the growth within the region was achieved despite the impact of supply chain and labor challenges across the industry.
The foodservice channel in North America continued to deliver good growth, the company said, with a strong finish to the year across quick service restaurants and coffee chains in particular, supported by Kerry’s brands and solutions to reduce complexity in back-of-house operations.
There was growth in LATAM: Volume growth in Brazil was driven by performance in beverage and ice cream, while growth in Mexico was led by snacks.
During the year, Kerry started production at its new facility in Rome, Georgia, and the taste facility in Irapuato, Mexico.
Revenue in the region increased by 14.6% to €1.6bn ($1.82bn) in the year.
Growth in the retail channel was driven by performance within the Food EUM. Meat achieved growth through plant-based meat alternative innovations, launches with natural preservation and increased demand for healthier coating systems. Bakery and confectionery delivered through texture systems and indulgent innovations. Dairy achieved growth in premium and dairy-free ice cream ranges, while international dairy markets reflected increased demand versus supply dynamics. Within the beverage EUM, there was growth with low/non-alcoholic beverages incorporating Kerry’s botanicals, natural extracts and sugar reduction technologies.
The foodservice channel achieved growth particularly in the UK and Southern Europe. This was broad-based across end use markets, as customers extended their menu ranges and reintroduced limited time offers as the year progressed. Russia and Eastern Europe continued to deliver growth across both retail and foodservice channels, led by Meat and Snacks.
Revenue in the region increased by 14.8% to €1.4bn ($1.59bn) in the year. This reflected volume growth of 11.3%: The overall growth across the region was led by China and the Middle East.
The company opened a new taste facility in Durban, South Africa, made progress on the development of a new taste facility in Jeddah, Saudi Arabia, and announced the development of a new taste facility in Karawang, Indonesia.
Consumer Foods reported revenue decreased in the year by 10.5% to €1.1bn ($1.25bn).
Dairy delivered strong overall growth with an excellent final quarter, Kerry said. This was led by volume growth in the Strings & Things snacking range, with spreadable butter ranges also delivering a strong performance.
Kerry said its markets remain highly dynamic with a continued good demand environment, despite the backdrop of Covid-19 and supply chain challenges across the industry. While market conditions remain uncertain, the company said it is strongly positioned for growth.
Kerry said it will continue to strategically evolve its portfolio and invest capital aligned to its strategic priorities and key growth platforms.
The group’s earnings guidance includes the net dilution from the recent portfolio changes. Kerry expects to achieve adjusted earnings per share growth in 2022 of 5% to 9% on a constant currency basis.
Edmond Scanlon, Kerry CEO, said, “We ended the year on a strong note with excellent growth across our business. In 2021 we achieved strong overall growth across all regions with Group revenue of €7.4bn, driven by volume growth of 8.0%. In the Taste & Nutrition retail channel we continued to deliver strong growth, while we achieved excellent growth in foodservice with business volumes in all regions above 2019 levels in the fourth quarter. This growth was well spread across our end use markets, with Beverage, Bakery and Meat delivering particularly strong performances.
“The year was important for Kerry from a strategic perspective. We continued to enhance our position as a market-leading taste and nutrition company with a number of strategic portfolio developments, while further enhancing our local footprint to support our growth ambitions, which we outlined as part of our strategic update at the Capital Markets Day in October.
While recognizing that current market environment and inflationary pressures continue to present challenges across our industry, Kerry is stronger positioned and more resilient than ever as we enter a new strategic cycle. Our earnings guidance range for 2022 reflects the Group’s strong growth prospects and the net effect of recent portfolio developments.”
Kerry’s annual report will be published in March and the general meeting will be held on April 28.