Kerry Group Plc

Basis of preparation. FY2021–FY2023 are total Group as reported (including Dairy Ireland). FY2024–FY2025 are continuing operations (Dairy Ireland presented as discontinued in FY2024). This break inflates the apparent revenue decline and margin step-up between FY2023 and FY2024. Sources: Kerry "Financial Highlights" (revenue, EBITDA, FCF, adjusted EPS); Kerry "Leverage Ratio"; FY2024/FY2025 preliminary results; H1 2026 report (FY2025 audited statements). Net income for FY2021–FY2024 is from a data aggregator (Kalkine) and flagged as such.

Income Statement (chartable)

Notes: FY2024 net income includes discontinued operations and the €27.8m post-tax gain on Dairy Ireland disposal; the FY2024 net margin is therefore overstated against continuing revenue. Reported revenue CAGR FY2021–FY2025 = −2.1% p.a. (distorted by disposals); continuing revenue FY2024→FY2025 = −2.5% (volume +3.0%, price −0.3%, net disposals −1.4%, FX negative).

FY2025 detailed P&L (audited, €m): Revenue 6,757.6; EBITDA 1,208.1; depreciation (net) 220.0; intangible amortisation 89.0; non-trading items (94.5); operating profit 804.6; finance income 33.2; finance costs (85.4); other income 7.5; share of JV (1.2); profit before tax 758.7 (FY2024: 778.4); income tax (99.9); profit after tax 658.8; attributable 658.5. Basic EPS 400.2c (FY2024: 424.5c, incl. Dairy Ireland); diluted EPS 399.3c; adjusted EPS 481.5c (+3.0% reported, +7.5% constant currency). Weighted average basic shares 164.55m.

Gross profit. Kerry does not headline gross profit in its results releases. CFO Marguerite Larkin indicated a FY2025 gross margin of c.38%, targeted to exceed 39% by 2030 (MarketBeat summary of the 2030 targets call), implying FY2025 gross profit of roughly €2.57bn (derived). A five-year gross-profit series is n/v.

Operating income. FY2025 operating profit before non-trading items was €899.1m (13.3% margin); after non-trading items €804.6m (11.9%). Comparable five-year operating profit series n/v.

Source: H1 2026 Interim Report. H1 2026 adjusted EPS +7.9% constant currency; FX translation drag 5.6%.

Balance Sheet

Discrepancy flag: an alternative aggregator (Kalkine) shows FY2021–FY2024 net debt of 2,084.5 / 2,163.7 / 1,594.6 / 1,909.6 €m — likely a lease-definition or translation difference. FY2025 €2,244.2m is confirmed by the audited balance sheet.

Audited balance sheet detail (€m):

Source: H1 2026 Interim Report. Total equity 1 Jan 2025: €6,487.3m. Goodwill is not split from other intangibles in the condensed statements. The fall in cash and current borrowings between H1 2025 and FY2025 reflects repayment of the €950m 2025 bond in September 2025.

Cash Flow

FY2025 cash flow detail (audited, €m): Cash generated from operations 936.7; net cash from operating activities 755.5; purchase of assets (gross capex) (261.6); purchase of businesses (29.7); disposal proceeds 37.6; dividends paid (215.2); purchase of own shares (500.3); lease payments (41.0); repayment of borrowings (950.0). Cash conversion (FCF / adjusted earnings after tax) 81% (FY2024: 95%). Net capex FY2021: €315m (FY2020: €311m) per NutritionInsight summary of FY2021 results; FY2022–FY2024 capex n/v.

H1 2026 FCF bridge (€m): EBITDA 558.1; average working capital movement (80.6); pension (2.4); finance costs paid (29.4); other income 7.5; tax paid (46.3); net capex (144.6) → FCF 262.3 (H1 2025: 308.6); cash conversion 76% (85% on balance-sheet working capital basis).

Ratios (FY2025, derived unless stated)

Commentary on trends, inflections and drivers.

Revenue: The headline five-year decline (€7.35bn → €6.76bn) is a portfolio story, not a demand story. FY2022 revenue (€8.77bn) was inflated by inflation-driven pricing and Dairy Ireland; from FY2023 the Group passed through input-cost deflation (FY2024 pricing −1.9% group; FY2025 −0.3%; H1 2026 −1.0%) and exited lower-margin businesses (Sweet Ingredients, Dairy Ireland). Underlying volume growth has been consistent: management cites average volume growth of 3.8% over four years and delivery of its earnings algorithm in eight of the last ten years (2030 targets call). FX is now the dominant reported-revenue swing factor: H1 2026 translation was −4.8%, driven by a sharply weaker USD (closing EUR/USD moved from 1.18 at FY2025 to 1.13 at 30 June 2026 per the report's closing-rate table; press reported c.15% USD weakness during 2025).

Margins: The EBITDA margin inflection from 14.5% (FY2023) to 17.9% (FY2025) has three drivers: (1) mix — removal of the c.4.8%-margin Dairy Ireland business; (2) the Accelerate Operational Excellence programme (completed 2025) and now Accelerate 2.0 (footprint optimisation and digital excellence), cited as the primary driver of the H1 2026 +60bps; (3) operating leverage and "net price" (deflation passed through slower than input-cost declines). The 20–21% 2030 target implies a further c.250–300bps.

Earnings: Adjusted EPS compounded at c.6.1% p.a. in reported terms FY2021–FY2025 (380.8c → 481.5c) despite disposals, helped by buybacks (weighted shares fell from 166.0m in H1 2025 to 160.6m in H1 2026). Basic EPS has lagged adjusted EPS because of rising non-trading charges (Accelerate restructuring €71.4m gross in FY2025; €34.9m gross in H1 2026) and brand-intangible amortisation.

Cash and balance sheet: FCF peaked at €766m in FY2024 (95% conversion) and normalised to €643m (81%) in FY2025 and 76% in H1 2026 as capex stepped up (H1 net capex +20% y/y) and working capital was rebuilt. Leverage rose from 1.5x (FY2023) to 1.9–2.0x as Kerry returned €715m to shareholders in FY2025 (dividends €215m + buybacks €500m) and €329m in H1 2026, while the €950m 2025 bond was repaid from cash. Leverage remains within investment-grade comfort (BBB+/Baa1).

Management guidance. FY2026 constant-currency adjusted EPS growth 6–10% (FX translation headwind 1–2%; c.160m average shares), implying roughly 510–530c in constant currency (derived from 481.5c) and somewhat lower reported. Management expects translation to turn favourable for the rest of 2026 at prevailing rates. 2030 targets: 3–5% volume, 20–21% EBITDA margin, HSD+ cc EPS growth, 85%+ cash conversion, 12–13% ROACE.

Consensus expectations. FY2026 revenue c.€6.82bn (Aug 2026), modest EPS downgrades after H1; consensus forecasts reportedly embed c.5.9% annualised revenue growth (Simply Wall St) — this looks optimistic relative to guidance unless FX reverses materially.

Bull case.

1. Volume engine is intact and accelerating (Q2 2026 +3.5%; foodservice +4.8%; emerging markets +5.0%), with management's 3–5% range set on a flat-market assumption.

2. Margin runway of c.250–300bps to 2030 is credible given 340bps achieved FY2023–FY2025 and +60bps in H1 2026, with Accelerate 2.0 footprint savings still to annualise.

3. At c.17x adjusted P/E and c.13x EV/EBITDA, Kerry trades at a discount to flavour-house peers despite comparable growth, while buybacks (~10% share count reduction since late 2023) and 10% dividend growth support per-share compounding.

Bear case.

1. Reported revenue and basic EPS keep falling (FY2025 basic EPS −5.7%; H1 2026 −3.8%), with recurring "non-trading" restructuring charges (€94.5m in FY2025) blurring the adjusted/statutory gap.

2. Cash conversion has slipped to 76% and leverage risen to 2.0x while returns stay at c.10.5% ROACE — the 12–13% ROACE and 85%+ cash conversion targets require a clear inflection.

3. Heavy US exposure (42% of revenue) to USD weakness and to US food-policy shifts, plus stagnant European volumes, could cap growth at the low end of the 3–5% range.

Key catalysts and monitorables (next 12 months).

• Q3 2026 IMS (expected late Oct 2026): Q3 volume vs H1's 3.3%; FX turning favourable.

• Completion of the €300m buyback by 31 Dec 2026 and any new programme with FY2026 results (Feb 2027).

• FY2026 cash conversion vs 85% target; capex trajectory.

• Accelerate 2.0 site closures and non-trading charge run-rate.

• Repayment of the c.€149m Sweet Ingredients vendor loan note (expected within 12 months of 30 Jun 2026).

• US regulatory developments on food additives/ultra-processed foods.

• Bolt-on M&A in biotech or emerging markets; credit-rating stability.

Analyst verdict. Kerry enters late 2026 as a cleaner, more focused company than at any point in its history: the dairy and consumer-foods legacy is gone, the portfolio is weighted to taste, health, preservation and biotech, and the operating model has delivered roughly 3–4% volume growth through a period of flat developed-market consumption. The margin story is real and evidence-based — 14.5% to 17.9% in two years, with H1 2026 adding another 60bps — and the 2030 target of 20–21% is a natural extension rather than a leap. Capital returns are generous and the balance sheet, at BBB+/Baa1 and c.2x leverage with no bond maturities until 2029, is not a constraint.

The market's scepticism is nonetheless understandable. Reported revenue has fallen for three consecutive years, statutory EPS is declining, restructuring costs have become a recurring feature, and cash conversion has weakened precisely as the company commits to 85%+. ROACE of 10.5% is mediocre for a business that markets itself as asset-light innovation partner, and the 12–13% target depends on both margin delivery and FX cooperation. The concentration in the US — 42% of sales — means currency and policy shocks pass straight through to reported numbers.

Our synthesis: the investment case rests on whether Kerry can convert operational progress into visible statutory growth. If H2 2026 shows volumes holding at 3%+, FX turning neutral-to-positive, and cash conversion recovering towards 85%, the stock's discount to flavour-house peers (c.17x adjusted P/E) looks unwarranted and the 2030 algorithm supports high-single-digit per-share compounding plus a c.1.7% yield. If cash conversion and Europe do not improve, Kerry risks being valued as a low-growth ingredients company despite its repositioning. On balance, the evidence supports a constructive but execution-dependent stance, with Q3 2026 trading and FY2026 cash flow as the decisive near-term tests.