Kerry Group (Baa1, BBB+; S); FY23 results in line, Strong BS, Buybacks to come; cash lines unch

Results came largely in-line with EBTIDA of €1.165b (c€1.18b) & FCF of €701m (c651m) - FCF ~60m higher than last yr despite higher capex (at €303m/+80m yoy) & driven by improvements in working capital. Earnings call mgmt guiding to €300m capex going forward (~4-5% of sales). Cash conversion was strong 92% (vs. 82% last yr) & in call mgmt guiding to "in excess of 80%" on avg. working capital assumptions next yr - i.e. peak efficiency reached.

Net debt fell from €1.8b in Q3 to €1.6b (€2.2b prior year) bringing leverage (net debt to EBITDA) down from 1.8* to 1.5* over the year.

Guidance for FY24 is 5-8% constant currency growth in adj. EPS which looks like a miss on consensus - it says this reflects "overall consumer market volumes [that] remain relatively muted". Volume growth is for "low-single digits" - we see consensus adjusting towards that since Q3 results.

Final Divided of 80.8c/share (FY 115.4c) & re. share buybacks it has €140m remaining in October/€300m share buyback programme - Its disclosed plans for "further share buyback in 2024" with details to be announced once existing is completed (~April).

No view on the curve here though strong BS position to end the FY. Looking forward continued acquisition activity & size of announced buybacks to drive credit direction.

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