Kerry Group Q2 Earnings Call Highlights

Key Points

• Strong first-half performance: Kerry Group delivered 3.3% volume growth, 5.8% organic EBITDA growth and a 60-basis-point margin expansion. Adjusted EPS rose 7.9% in constant currency to €2.141, supported by broad-based regional and channel growth.
• Growth was led by APMEA and the Americas: APMEA volumes increased 4.9% and Americas volumes rose 3.7%, while Europe grew 0.5%; all three regions expanded EBITDA margins. Demand was strongest in snacks, meat, dairy and beverages, alongside salt- and sugar-reduction and high-protein solutions.
• Outlook and shareholder returns maintained: Kerry reiterated its full-year adjusted EPS growth guidance of 6%–10% in constant currency, despite expectations for limited input-cost inflation and a 1%–2% currency headwind. The company increased its interim dividend 10% to €0.462 per share and repurchased €173 million of stock.

Kerry Group LON: KYGA reported first-half 2026 volume growth of 3.3% and said adjusted earnings per share rose 7.9% on a constant-currency basis, as growth accelerated in the second quarter and the company expanded margins across all three operating regions.

Chief Executive Officer Edmond Scanlon said the company’s volume growth increased from 3.1% in the first quarter to 3.5% in the second quarter, exceeding end-market and channel growth. The performance was broad-based across the Americas, Europe and the Asia Pacific, Middle East and Africa, or APMEA, region, as well as retail and food-service channels.

“Growth was led by a strong performance in the food service channel with a range of new menu innovations, seasonal launches, and cost reduction solutions,” Scanlon said. Retail growth was supported by product renovation and innovation activity in higher-growth areas, he added.

Revenue, Margins and Earnings

Revenue totaled €3.3 billion in the first half. Volume growth of 3.3% was partly offset by a 1% decline in pricing, which Chief Financial Officer Marguerite Larkin attributed to overall input-cost deflation during the period. Adverse currency translation reduced revenue by 4.8%, reflecting movements in the U.S. dollar against the euro. Disposals net of acquisitions had a 1.1% impact as the company continued its Accelerate 2.0 footprint-optimization strategy.

EBITDA rose to €558 million, representing 5.8% organic growth, while the EBITDA margin expanded by 60 basis points. Larkin said Accelerate 2.0 contributed 40 basis points of margin expansion, driven by footprint-optimization progress in North America and Europe as well as digital initiatives across manufacturing, commercial activities and global business services.

Net pricing contributed 20 basis points to margins, while operating leverage and portfolio mix added 10 basis points. Currency was a 20-basis-point headwind, partially offset by a 10-basis-point benefit from acquisitions and disposals.

Adjusted earnings per share were €2.141, up 7.9% in constant currency and 2.3% on a reported basis. Return on capital employed was 10.5%, including a 30-basis-point currency headwind and 10 basis points of underlying improvement from the prior year.

Regional Performance

• Americas: Reported revenue was €1.8 billion. Volume increased 3.7% for the half and 3.9% in the second quarter, while EBITDA margin rose 40 basis points to 18.9%. Scanlon cited growth in snacks, meat and beverage applications in North America, along with strong growth in Mexico, particularly in snacks and beverages.
• Europe: Reported revenue was €687 million, with volume growth of 0.5% for the half and 0.6% in the second quarter. EBITDA margin increased by 80 basis points. Beverage growth included refreshing beverage and low- and no-alcohol solutions, while dairy growth was supported by taste and protein-masking offerings.
• APMEA: Reported revenue increased to €831 million. Volume grew 4.9% in the half and 5.2% in the second quarter, while EBITDA margin expanded 80 basis points. Growth was led by the Middle East and Africa, with China returning to growth and Southeast Asia delivering a solid performance.

Across end-use markets, Kerry said volume growth was led by snacks, meat, dairy and beverages. The company also cited demand for salt- and sugar-reduction technologies, botanicals, natural extracts, high-protein taste solutions, enzymes and natural preservation products. Emerging-market volumes increased 5%, led by the Middle East, Africa and Latin America.

Cash Flow, Capital Returns and Outlook

Free cash flow was €262 million, representing average cash conversion of 76%. Cash conversion based on working-capital movement between balance-sheet dates was 85%. Larkin said average working capital represented an €81 million investment, reflecting business growth, development activity and higher inventory levels intended to mitigate supply-chain disruption risks associated with recent geopolitical events.

Capital expenditure rose to €145 million, reflecting the phasing of strategic investments across regions. Net debt at the end of June was €2.4 billion, with a weighted average maturity of 5.8 years and a net debt-to-EBITDA ratio of two times.

The company announced an interim dividend of €0.462 per share, up 10% year over year. It also repurchased €173 million of shares during the period.

Looking ahead, Larkin said the company expects input-cost conditions to shift from overall deflation in the first half to limited inflation in the second half. Kerry now expects foreign-currency translation to reduce full-year adjusted earnings per share by 1% to 2%.

Scanlon said the company remains positioned for further volume growth and margin expansion despite market uncertainty, supported by its innovation pipeline. Kerry maintained its full-year guidance for adjusted earnings per share growth of 6% to 10% in constant currency.

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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