Kerry (KYGa.I): 2Q26 Results: Volumes beat consensus, mid-term volume target moderated to 3-5%

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Kerry (KYGa.I): 2Q26 Results: Volumes beat consensus, mid-term volume target moderated to 3-5%

Goldman Sachs Kerry (KYGa.I)

During the call, we seek to understand: (1) Management’s confidence in continued

market outperformance in Americas, APMEA and the foodservice channel. (2) Traffic

trends in foodservice into 3Q and potential impact from US Cyclospora outbreak, which

may dampen quick-service restaurant traffic, and/or boost processed alternatives

(non-fresh produce). (3) Whether reformulation demand for artificial colours and GLP-1

friendly innovation is driving a step-up in customer innovation in the first half (in-line

with peer commentary).

The shares have outperformed Consumer Ingredient peers by 3% over the past month

and underperformed by 5% year-to-date. The shares have re-rated from near-lows of

13.0x NTM Cons. P/E to 15.5x since the end of Q1.

Valuation & Risks

Valuation

We are Buy rated on Kerry, and our 12-month price target is €90. Our price target is

based on a two-stage DCF, assuming a WACC of 8.5% and a terminal growth rate of

2.0%.

Downside risks to our view and price target include:

n GLP-1 adoption. The widespread adoption of GLP-1 agonists poses structural

headwinds to food consumption volumes. Reduced caloric intake would flow

through to lower ingredient demand with snacks and confectionery more exposed

than functional and proactive health ingredients.

n Food service channel exposure. Persistent cost-of-living pressures could entrench

at-home consumption habits, and Kerry’s food service exposure (~32% of Group)

leaves the company vulnerable to extended weakness in this channel (particularly in

North America) should quick-service restaurant traffic remain soft or consumers

trade down from out-of-home dining.