Kerry Regulatory News (KYGA)

Date: 27 April 2023

LEI: 635400TLVVBNXLFHWC59

KERRY GROUP

Q1 INTERIM MANAGEMENT STATEMENT 2023

Continued Growth through the First Quarter

OVERVIEW

¹ Includes impact from the disposal of the Sweet Ingredients Portfolio which completed on 27 March 2023 as previously announced

Markets and Performance

Consumer demand remained resilient through the period given the heightened inflationary environment. Customer innovation was primarily focused on new taste profiles, enhancing their products' nutritional characteristics and providing more value options for consumers.

Group reported revenue increased by 10.3% in the period. This comprised increased business volumes of 0.2%, increased pricing of 8.3%, favourable translation currency of 1.5% and contribution from business acquisitions net of disposals of 0.3%. Group EBITDA margin decreased by 70bps primarily driven by the mathematical impact of passing through input cost inflation, partially offset by the positive effect from cost efficiency initiatives.

At the end of the period, the Group completed the sale of the trade and assets of its Sweet Ingredients Portfolio to IRCA.

Business Reviews

Taste & Nutrition

Growth driven by strong performance in foodservice channel

> Overall volume growth of 1.2% with good growth in APMEA and Europe

> Growth led by Dairy, Snacks and Pharma

> Pricing of 7.2% reflected the management of input cost inflation

> EBITDA margin reduction of 80bps with the effect of passing through input costs partially offset by efficiencies

Taste & Nutrition delivered solid overall volume growth through the period despite the effect of increased pricing. Foodservice continued its momentum with strong volume growth, supported by innovation with quick service restaurants and coffee chains on new menu development, seasonal products and solutions to enhance back-of-house efficiency. Overall performance in the retail channel was muted in the period, reflecting customers' inventory management in North America.

Growth in the period within the Food EUM was led by Dairy, Snacks and Meat, supported by continued innovation and strong performances in savoury taste and Tastesense® salt and sugar reduction technologies. Business volumes in emerging markets increased by 6.0% in the period, driven by strong growth in the Middle East, Southeast Asia and LATAM.

The global Pharma EUM achieved good volume growth, led by a strong performance in cell nutrition.

Americas Region

> Volume reduction of 1.6% with customer inventory management significantly impacting the retail channel

> Foodservice performed well with continued strong business development

> Beverage, Dairy and Meat delivered a solid overall performance

> LATAM delivered strong growth

Performance in the region was impacted in the period by customer inventory reductions particularly in the North America retail channel. Foodservice performed well with continued growth and business development in back-of-house efficiency solutions and seasonal menu offerings.

Within North America, growth in Beverage was driven by innovations incorporating Kerry's botanicals, coffee extracts and Tastesense® sugar reduction technologies. Dairy also performed well with Taste technologies across ice cream and dessert categories, while performance in Meat was driven by culinary taste, texture systems and clean smoke technologies.

Growth in LATAM was led by a strong performance in Mexico across Beverage and Snacks, while growth in Brazil was driven by performance in Meat and Beverage.

Europe Region

> Volume growth of 3.9%

> Growth led by Snacks, Dairy and Meals

> Strong growth in foodservice with retail delivering a solid performance

The region achieved another strong quarter of growth, while managing significant price inflation. Snacks delivered strong growth through savoury taste systems and Tastesense™ salt reduction technologies. Growth in Dairy was supported by new innovations in ice-cream and dairy applications in the foodservice channel, while Meals achieved good growth through taste technologies and functional solutions.

Growth was broad-based across the region with strong growth in the foodservice channel, particularly in quick service restaurants and coffee chains, while the retail channel delivered a solid performance given the current inflationary environment.

APMEA Region

> Volume growth of 5.2% led by the Middle East and Southeast Asia

> Strong growth in Meat, Meals, Dairy and Bakery

> Retail performed well with food service delivering strong growth

Growth in the region was primarily driven by strong performances in the Middle East and Southeast Asia, while China recovered through the period as market conditions improved.

Overall growth was strong across the Food EUM, particularly in the foodservice channel. Growth in Meat was driven by local authentic taste and texture solutions, while Meals and Dairy delivered strong growth through culinary and dairy taste systems. Performance in Bakery was supported by new launch activity and increased demand for functional systems with regional leaders.

During the period, good progress was made in expanding the Group's capacity in the region, including the development of its new taste facility in Karawang, Indonesia.

Dairy Ireland

Overall performance reflective of market conditions

> Volume reduction of 5.8% and increased pricing of 14.4%

> EBITDA margin reduction of 80bps resulting from input cost inflation

Overall volumes in the period in Dairy Ireland were lower and pricing was higher given the heightened year-on-year inflationary cost environment.

Dairy Ingredients volumes were impacted by high market prices and expectations of inflation turning to deflation, given global market supply and demand dynamics across the first quarter.

Dairy Consumer Products performed well in the period, with overall growth led by Kerry's branded cheese ranges and private-label spreads, supported by increased promotional activity.

Financial Review

At the end of March, the Group's net debt of €1.7 billion reflected cash generation and proceeds from the disposal of the Sweet Ingredients Portfolio. The Group's consolidated balance sheet remains strong, which will facilitate the continued organic and acquisitive growth of Group businesses. Foreign exchange translation is currently expected to be a headwind of approximately 3% on earnings in the full year based on prevailing rates.

As announced on 16 February, the Group has proposed a final dividend of 73.4 cent per share for approval at the Annual General Meeting.

Future Prospects

While market conditions are currently uncertain, Kerry remains strongly positioned for growth with a good innovation pipeline. The Group will continue to manage input cost fluctuations with its well-established pricing model. Kerry will continue to invest capital and develop its portfolio aligned to its strategic priorities.

The Group expects to achieve adjusted earnings per share growth in 2023 of 1% to 5% on a constant currency basis.

Disclaimer

This Announcement contains forward looking statements which reflect management expectations based on currently available data. However actual results may differ materially from those expressed or implied by these forward looking statements. These forward looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update any forward looking statement, whether as a result of new information, future events or otherwise.