Kerry Group: Post the call: ST volumes momentum improves, MT targets embed prudence on end market expectations

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Kerry Group: Post the call: ST volumes momentum improves, MT targets embed prudence on end market expectations

even as end markets remain subdued, and top-line and FX are

supporting slight EPS 26E upgrades. In the mid term, volume expectations of 3-5%

should be seen as more prudent in not assuming an end market acceleration. We

welcome GM disclosure and the continued elevation of the profitability (high

quality, led by GM, whilst R&D picks up) as a hallmark of the portfolio shift to

higher value technologies/solutions.

• Key highlights from the call: 1) Q226 results: Q2 volume growth accelerated

to 3.5% (vs 3.1% in Q1), with improvement broad-based across all three

regions and with Foodservice acceleration to +5.0% in the quarter. 2) FY26

Outlook. Maintained FY26 constant-currency EPS growth guidance range of

6-10%, but upgraded volume expectation: now expects H2 volume growth

~Q2 level (~3.5%), implying FY volume closer to ~3.5% (vs ~3% previously

outlined). The company also noted that Q2 regional volume performance is a

good proxy for the rest of FY26 by region. Input costs: expects to move from

deflation in H1 to limited inflation in H2. 3) MT Volume: Set MT volume

growth target of 3-5%, framed conservatively (not assuming an end-market

growth uptick). Regional medium-term growth framing: Americas: 3-5%,

Europe: ~1-2% (expects improvement MT vs 0-1% in FY26), APMEA: 5-9%,

with ambition to build towards high single digits over time; growth expected

to be led more by Middle East & Africa, then Southeast Asia (China assumed

more modest). 4) MT margin: 2030 EBITDA margin target: 20-21%, with

margin expansion driven by: Efficiencies (Accelerate program) more heavily

in earlier years, increasing contribution from mix and leverage later in the plan