Global nutrition giant Kerry Group said it is seeing strong recovery in business volumes in the second half of the year but added that the negative impact of COVID-19 earlier this year will result in a decline in full-year profits for 2020 by as much as 11%.

Announcing third-quarter results on Wednesday, Kerry updated its profit outlook for its 2020 financial year and is now forecasting a decline in earnings per share of 8% to 11% for the year.

Encouragingly, Kerry’s third-quarter results show a sequential improvement in sales volumes right across its business over recent months.

Kerry obviously has a strong line of sight of where markets are at with less than two months left in 2020

And while the company said there is still a high level of uncertainty in markets due to the negative impact of COVID-19, Kerry added that it expects business volumes to return to growth in the final quarter of the year thanks to strong growth in retail sales and the continued reopening of the food service sector.

Kerry Group.

This is a very strong statement given the current second surge of COVID-19 in Europe and the US but Kerry obviously has a strong line of sight of where markets are at with less than two months left in 2020.

Shares in Kerry Group were up 3% in early trading on Wednesday.

Performance in the retail channel remained strong

“This year has seen unprecedented variability and complexity across our industry. In the food service channel, we have seen a strong recovery since April, as restaurants reopened and adapted their operations and menus to cater for increased consumer demand for takeaway, online and delivery,” said Kerry CEO Edmond Scanlon.

“Performance in the retail channel remained strong, primarily through growth in authentic cooking, plant-based offerings and health and wellness products,” he added.

By division

Taste and nutrition

In its core taste and nutrition division, Kerry said sales volumes declined 1.9% in the third quarter of 2020, which is a marked improvement on the near 12% decline in sales volumes in the second quarter of the year when the COVID-19 pandemic was at its peak around the world.

While this is still a big drop on normal sales volumes, it is an improvement on second-quarter business volumes

In the food service sector, which is a hugely important sales channel for Kerry’s taste and nutrition division, Kerry Group said third-quarter sales were down 15% year on year in the third quarter. While this is still a big drop on normal sales volumes, it is an improvement on second-quarter business volumes when Kerry said sales to food service customers were down almost 50%.

Consumer foods

Kerry Group’s consumer foods division – including its stable of retail food brands such as Richmonds, Denny and Cheesestrings – recorded underlying sales volume growth of 1.4% in the third quarter and a slight expansion of profit margins.

Acquisitions

Kerry also announced that it had acquired two new businesses in the third quarter for a combined sum of just over €200m. In China, Kerry said it had acquired Jining Nature Group, which produces flavour solutions for meat and snacks.

Kerry said it had also acquired Bio-K Plus, a company based in the US and Canada which produces probiotics for beverage and supplements.