Kerry Group has reported a double-digit fall in profits for its 2020 financial year, mostly due to the major disruption caused by the COVID-19 pandemic.

Announcing full-year results on Tuesday, Kerry reported a 12% decline in trading profits for 2020 to €797m, as trading margin narrowed slightly to 11.5%.

Earnings (EBITDA) fell 9% in 2020 to just under €1bn, as earnings margins narrowed to 14.4%.

Kerry Group’s adjusted earnings before tax was down 12% for 2020 to just under €700m.

Overall, Kerry Group reported sales of just under €7bn for 2020, which was down 4% year on year.

Net debt

Net debt reduced slightly to just over €1.9bn and the group remains lowly borrowed, with a debt to EBITDA ratio of just 1.9 times.

Despite the fall in profits, Kerry Group increased its full-year dividend for 2020 by 10% to 86.5c per share.

This will see just under €19m in cash paid out to Kerry Co-op, which is the largest shareholder in Kerry Group with a 12.3% stake in the company.

Kerry Group formally announced for the first time that it has begun a strategic review of its dairy business in Ireland and the UK, which it is currently in negotiations with Kerry Co-op seeking to form a joint venture business.

“We note that there is no certainty that this review will lead to a transaction. Further communication will be made in due course as appropriate,” said Kerry Group in its announcement.

Shares in Kerry Group increased more than 5% in early morning trading on Tuesday following the release of its 2020 results.

By division

Taste and Nutrition

Kerry Group’s Taste & Nutrition division, which is the main driver of growth in the company, recorded a 4% decline in sales for 2020 to just under €5.8bn. This drop in sales was mostly driven by a 3% decline in sales volumes.

In the second quarter of 2020, Kerry Group’s sales volumes plunged 11% but recovered strongly in the second half of the year with volumes showing modest growth of 0.7% in the final three months of 2020.

The biggest decline in sales volumes came from the collapse in demand from food service customers following the widespread health restrictions related to COVID-19 which forced many restaurants and fast-food businesses to close for much of 2020.

Kerry said food service sales volumes were down 19% for 2020 but the sector was continuing to recover with food service sales back just 8% in the final months of the year.

In contrast, sales volumes to customers operating in the retail channel grew by 4% last year, led by strong growth in the beverage (+8%), pharma (+9%), snacks (+4%) and meals (+6%) categories.

Consumer Foods

Kerry Group’s consumer foods division recorded a 2% decline in sales to just under €1.3bn for 2020. However, trading profits in the division were steady at just under €100m as profit margins widened slightly to 7.8% during the year.

Kerry said its consumer business recorded underlying growth in sales volumes of 2.2%, with really strong volume growth of almost 9% recorded in the final months of the year.

Additionall, Kerry's consumer dairy brands such as Cheesestrings and Dairygold performed strongly in 2020, while spreadable butter sales also recorded healthy growth.

On the meat side, Kerry said its core meat brands such as Richmond sausages and Denny performed well during the year due to increased at-home consumption.