Kerry Group Q1 Earnings Call Highlights

Key Points

• Q1 volume growth 3.1% — volumes were driven by foodservice outperformance, customer renovation and innovation, and management reiterated full‑year constant‑currency EPS growth guidance of 6%–10%.
• Margins expanding — EBITDA margin widened by 60 basis points in Q1, primarily from the Accelerate 2.0 program and operating leverage, leaving Kerry on track for its 2026 18%–19% EBITDA margin target.
• Pricing deflation and currency headwinds — pricing was −1.3% in Q1 and reported growth was hit by a −7.9% translation effect, though management now expects about a −3% translation headwind to full‑year EPS and flags some input inflation (spices, natural oils, distribution, energy) later in the year.

Kerry Group LON: KYGA opened 2026 with what management described as a “good start” in the first quarter, delivering volume growth across all three regions and continued margin expansion, while reiterating its full-year constant-currency earnings per share growth guidance of 6% to 10%.

Q1 volume growth led by foodservice and renovation activity

CEO Edmond Scanlon said the company delivered first-quarter volume growth of 3.1%, which he attributed to “continued strong end market outperformance,” supported by customer renovation activity and innovation. Scanlon reiterated a point previously made at CAGNY, noting that “circa 60% of our customer activity in North America is on renovation activity at the moment.”

From a channel perspective, Scanlon said foodservice “continued to strongly outperform the market,” driven by new menu innovations, seasonal products, and product renovation activity across global quick-service restaurants, fast casual concepts, and coffee chains. He added that retail growth was supported by renovation activity across global customers and retailer brands, along with innovation in “high-growth areas.”

Scanlon also highlighted growth across specific technology platforms, including savory taste, TasteSense, salt and sugar reduction technologies, and “integrated solutions” combining botanicals and natural extracts with fermentation-derived and enzymatic biofermentation capabilities and clean-label food protection systems.

Margins expand 60 basis points as Accelerate 2.0 progresses

CFO Marguerite Larkin said Kerry delivered 60 basis points of EBITDA margin expansion in the quarter, “primarily driven by Accelerate 2.0,” with additional contributions from operating leverage, product mix, net price, and disposals, partially offset by an adverse currency translation impact.

Scanlon said the group has expanded margins by over 300 basis points over the past four years and remains “well on track” to achieve its 2026 target of 18% to 19% EBITDA margin.

Regional performance: Americas and APMEA outpace; Europe returns to growth

By geography, Larkin reported volume growth of 3.4% in the Americas, led by both North America and Latin America. In North America, she cited strength in meat, snacks, and dairy, supported by customer efforts to improve nutritional profiles and launches featuring new signature taste profiles. In LATAM, Kerry saw strong growth in Mexico, “most notably within the snacks and beverage end markets.”

Europe posted volume growth of 0.4%, returning to growth. Larkin said beverage performed well on “new refreshing beverage innovations,” incorporating Kerry’s integrated taste technologies, botanicals, and sugar reduction solutions. Dairy growth was supported by protein taste solutions, while bakery category volumes were “challenged in the period.” Scanlon said Kerry is seeing “some progress in the retail channel” in Europe and expects “modest growth” for the remainder of the year broadly in line with the first quarter.

In APMEA, Kerry delivered volume growth of 4.6%, led by strong growth in Africa. Larkin said China returned to growth, with solid performances in the Middle East and Southwest Asia. She noted growth was led by meat, bakery, and snacks, supported by savory taste, texture, and enzyme technologies.

In response to analyst questions, Scanlon provided additional detail on APMEA, stating Africa now represents about 2% of the total company and approximately 10% of APMEA, and grew at “strong double digits.” He also noted “some slight softness in market conditions in Southeast Asia,” which management has factored into its outlook, while expecting Kerry to continue to outperform local markets.

Pricing deflation, currency headwinds, and input cost outlook

Larkin said pricing in the quarter was 1.3% lower, reflecting net deflation across Kerry’s input-cost basket. She added the company expects deflation in the first half of the year, with “some level of inflation in the second half,” and that it is “still probably looking at very limited deflation for the full year.”

On specific inputs, Larkin said the company is “seeing some level of inflation coming through on spices and natural oils.” She also cited increases in distribution and energy costs, varying by geography and hedging coverage. Larkin said Kerry plans to manage input inflation through its “very well-established pricing model,” including surcharges where appropriate, and through close collaboration with suppliers and customers.

Currency translation was a major factor in reported revenue movements. Larkin said organic growth in Q1 was “more than offset” by adverse translation of 7.9%, driven by the U.S. dollar’s movement against the euro. She said the impact is “most pronounced in the 1st quarter” and is expected to reduce as the year progresses. Based on prevailing rates, the company is now forecasting a translation headwind of approximately 3% to full-year earnings per share, compared to 4% previously.

Larkin also said disposals net of acquisitions had a 1.2% revenue impact, aligning with the company’s Accelerate 2.0 footprint optimization strategy, which management said is supporting margin expansion.

Guidance reiterated; supply chain de-risking in the Middle East

Management reiterated its full-year outlook despite geopolitical uncertainty. Scanlon said Kerry is maintaining its 2026 constant-currency EPS growth guidance of 6% to 10%, while remaining “strongly positioned for volume growth and margin expansion.”

Asked about the sustainability of volume growth amid potential second-half inflation, Scanlon said the company expects volume growth “to be similar to 2025,” and is “not calling out any material change” to retail or foodservice outlooks, while continuing to expect foodservice to outperform retail. He also described the innovation and renovation pipeline as “very solid.”

On potential disruption in the Middle East, Scanlon said Kerry has taken steps versus a year ago to “de-risk the overall supply chain,” including learnings around inventory levels and raw material routing. He highlighted investments that support a local footprint, referencing Oman, Saudi Arabia, and Egypt, and said the company’s position and actions have helped provide customers confidence and reduced the need to pull forward orders. In a separate exchange, Scanlon said he had not seen any material change in trends between March and April, and did not observe unusual order patterns.

Other items referenced on the call included net debt of EUR 2.2 billion at the end of the period, which Larkin said reflected cash generation, capital investment, and the share buyback program.

In discussing category trends, Scanlon pointed to continued growth drivers in dairy, including lactose-free products, sugar and sweetness reduction, and higher-protein formulations. He said Kerry’s lactase enzymes and TasteSense technology can provide a “synergistic benefit” in helping customers reduce sugar while maintaining taste and texture.

Scanlon also noted heightened limited-time offer (LTO) activity in foodservice versus prior years, as operators “double down on value” to drive traffic, which he said is “good for Kerry.” He added that Mexico is seeing significant excitement and foodservice activity around the World Cup, describing it as more pronounced there than in the U.S.

About Kerry Group LON: KYGA

Kerry Group plc, together with its subsidiaries, provides taste and nutrition solutions. The company operates in two segments, Taste & Nutrition, and Dairy Ireland. The Taste & Nutrition segment offers taste and nutrition solutions for the food, beverage, and pharmaceutical markets. The Dairy Ireland segment provides value-add dairy ingredients and consumer products, including functional proteins and nutritional bases. It operates in Ireland, rest of Europe, the Americas, the Asia Pacific, the Middle East, and Africa.

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