Ireland-based Kerry Group has pulled its financial guidance due to the implications of coronavirus, which boosted the Richmond sausages owner’s retail sales in the first quarter as more people ate at home, but hit foodservice operations.
Edmond Scanlon, the chief executive of the London-listed business, described the operating environment over the three months to 31 March: “We made a strong start to the year, with good underlying performance and particularly strong growth in the Americas.
“Since March, the restrictions on movement have significantly impacted customer demand beyond China and across the foodservice channel. Based on the current restrictions, we expect the impact on second-quarter performance to be much more significant than the first quarter.
“We continue to support our customers through this period and are working on a number of actions to mitigate the Covid-19 impact, including helping them move their offerings across channels and categories, planning for post-restriction product launches, while implementing internal cost actions.”
Group revenues climbed 3.4% during the quarter, with volumes up 0.2% and prices up 0.5%, the company said today (30 April).
Kerry’s consumer foods division saw a “positive impact” from Covid-19 of around 1.5%, partly due to stock piling, although volumes were down 4.8%. In 2018, the company lost a ready-meals contract with UK retailer Tesco, and when excluding the knock-on effects of that, volumes increased 2.8%.
“Our consumer foods business continues to see changes in consumer purchasing behaviour during the period of restrictions, which is driving significant volatility across categories,” Kerry said. “We will continue to invest for growth and pursue M&A opportunities aligned to our strategic growth priorities.”
It continued with respect to the outlook: “Since we provided our FY-2020 guidance in February, the Covid-19 pandemic has escalated significantly and impacted businesses throughout the world. Due to the resulting global uncertainty in relation to the timeframe and business impact from the pandemic, we are withdrawing our full-year guidance.”
In February, Kerry said its financial guidance for 2020 would be for 5% to 9% growth in adjusted earnings per share in constant-currency terms. While the company has pulled the outlook today, it did not provide an update on EPS.