Kerry Group has announced nine-month results to the end of September with pricing down but an increase in volumes and margins leading to growth guidance at 7-9%.

Kerry Group saw volumes increase by 2.4%, driven by the ingredients and flavours division, in the first nine months of the year.

Group revenues were back 2% due to negative currency impacts and businesses disposals, while input pricing remained relatively flat across the business, decreasing by 0.2%.

While showing early signs of recovery, consumer foods continue to drag down Kerry’s overall performance as the retail environment in Ireland and the UK remains weak. Business volumes for the division were back 1.2% for the first nine months, while pricing was marginally lower by 0.3%. The division is also adjusting its business portfolio and offloaded its UK pastry business and Freshways sandwich business earlier this year.

Group trading margins were up 60bps, driven by the ingredients and flavours division, with margins increased by 80bps. This division saw volumes increase by 3.6% despite industry de-stocking and lower inventory levels in many of Kerry’s food and beverage customers.

Sales volumes in the Asia-pacific region grew by 11.3% in the period, achieving double-digit growth through premium infant nutrition applications. The company saw volumes increase by 3.6% in the Americas region.

The group experienced a more challenged eastern European market, particularly in the meat sector. However, it saw solid growth in Russia despite recent political issues.

Net debt stood at €1.3bn at the end of September – an increase of €200m as reported at the half year. The increase reflects the impact of currency translation, increased capital expenditure and investment in working capital in the quarter.

Last year, the consumer division accounted for 27% of total group sales. The emergence of a price-conscious shopper has changed the retail landscape. This has facilitated the emergence of discounters such as Lidl and Aldi, at the cost of the big retailers such as Tesco.

This increasing competition is causing the retailers to fight back by reducing prices to maintain market share. This in turn is negatively affecting suppliers such as Kerry.