DAVY VIEW

We expect Kerry’s interim results to mark the nadir in growth across its Taste & Nutrition (T&N) Foodservice (FS) platform. We model a Q2 volume decline of 54% for the FS channel, which accounts for c.30% of T&N sales. For Q3 and Q4, we model FS volume declines of 24% and 10% respectively. We anticipate a resilient performance across the Retail T&N retail channel (4-5%). As volumes rebuild, associated negative operating leverage unwinds - our model assumes a return to T&N margin expansion in FY21. We have updated our model for FX, which catalyses a low-single-digit cut to EPS for FY20 and FY21. Despite a fluid trading environment, the current crisis has placed a greater emphasis on supply chain responsiveness (localised), toolkits and agility – as such, we expect Kerry to emerge with enhanced relevancy.