Kerry Group is forecasting 7-11 per cent growth in adjusted earnings per share this year, despite "significant" inflation in the cost of raw materials.

In an interim management statement issued ahead of its AGM, the food ingredients company said it maintained a solid financial performance in the three months to the end of March.

Continuing business volumes grew by 2.2 per cent broadly offsetting input cost inflation of approximately 4 per cent.

“As the quarter progressed international primary dairy market prices increased considerably due to a significant shift in the supply/demand balance.”

The company saw a more than 3.1 per cent rise in its ingredients arm in the first quarter to March 31st compared to a 0.2 per cent fall in its consumer foods division.

Growth in the ingredients and flavours division was boosted by an increase in customer inventories and growth in the Americas. Kerry also benefited from the 2012 acquisition of Millennium Foods and expansion into new business growth segments.

The company said it maintained “satisfactory growth” in the chilled meals sector but sales in the frozen category reflected the significant loss in consumer confidence in frozen meat products.

“Though Kerry Foods was unaffected by the Equine DNA issues which unfolded during the quarter, confidence in some market categories, including the frozen meals sector, was impacted.”

The group’s performance in the cheese slices category also reflected the decline in burger sales.

The Group’s closing net debt position at €1.3 billion was up marginally from the year-end position of €1.2 billion. The increase reflects the impact of capital expenditure in the quarter and increased investment in working capital.

Capital expenditure in 2013 is expected to be higher than the 2012 level as the Group commences development of the new Kerry Global Technology & Innovation Centre in Ireland.