Ladies and gentlemen, thank you for standing by, and welcome to the Keri Group And Preliminary Results 2019 Conference Call. At this time, all participants are in a listen only I must advise you that this conference is being recorded today, Tuesday, 18th February, 2020. I'll turn the conference over to your first speaker today, William Lynch, Head of Investor Relations.
Good morning, everyone. And welcome to Keri Group's Full Year 2019 Results Call. I'm William Lynch, Head of Investor Relations. And with me is Edmonds Gandlin, Group Chief Executive Officer and Marguerite Clarken, Group Chief Financial Officer. Edmund and Marguerite will take you through a presentation, capturing the key points of this morning's results updates.
And following the presentation, we will open the lines for your questions. Before we begin, Please note the usual disclaimer regarding forward looking statements. I will now hand over to Edmond.
Thank you, William. Good morning, everyone, and welcome to our full year results presentation. So turning please to Slide 4, and looking back at 2019, I characterize it as a very strong year for Cary. We delivered a very good performance, while at the same time making significant progress right across our strategic growth priorities. For me, the 3 key highlights were firstly we delivered very strong overall growth.
We grew revenue by 10 percent to EUR 7,200,000,000 and trading profits by 12% to over EUR 900,000,000. Secondly, we delivered a number of innovations in partnership with our customers by leveraging our strong integrated solutions capability and this drove significant growth across a number of end use markets. And I'll give you a little bit more detail on that shortly. And thirdly, we continued our strong track record of growth in developing markets with another year of double digit volume growth. We now have over 1,600,000,000 of revenue in developing markets, which is a remarkable achievement given our expansion in these markets has almost been exclusively organic over the last 25 years.
So now turning to Slide 5 and looking at our global taste and nutrition business. We delivered good volume growth of 4% with momentum building throughout the year and with a really strong finish to the year. Our nutrition and well-being technology portfolio had a strong performance and this was achieved through our integrated solutions incorporating our fermented or specialty specialized protein portfolio, probiotics, botanicals, and natural extracts. This growth is reflective of consumers increasing demands for enhanced nutrition as they seek better health and overall well-being. Moving on to food service, we achieved good growth of 5.5% and this was underpinned by new menu development and nutrition net innovations to help customers meet ever increasing consumer demand.
From a margin perspective, we expanded our trading and EBITDA margins in the year, with our trading margin increasing to 15.3% and our EBITDA margin increasing to 18%. The key driver of our margin expansion was the enhanced product mix as we continue to add more value for our customers. Now turning to Slide 6 and taking a moment to look at our performance by end use market. As we said before, our consumer led customer we are consumer led customer centric organization. And we developed our growth strategies through the lens of end use markets.
This is aligned to how we partner with our customers meet new and evolving consumer needs right across food, beverage and farmer markets. And as you can see from the breakdown on the right hand side of the slide, with an excellent performance across a number of end use markets. Starting with the meat end use markets, we delivered an excellent performance with volume growth in excess of 9%. And key drivers of growth here were clean label, natural preservation and plant based innovations. In Snacks, we also had Moving on to the dairy end use market with a number of innovations to meet consumer demands for healthier options in the ice cream category, We also made progress for our plant based with our plant based solutions to deliver dairy alternatives for our customers.
On meals, they were impacted volumes here were impacted by product churn within the category, particularly in North America. And within our beverage end use markets, we had a very strong performance in Europe and apnea, where we have been working with a number of customers as their nutrition and wellness partner, supporting them right across their beverage platforms. And I'll give you a little bit more detail on this later on in the presentation. And then finally on the pharma end use market, again, we achieved good growth, and this was primarily driven by excipients. Moving on to Slide 7 and looking at our business through the regional lens.
And firstly, looking at the Americas regions. Volumes grew by 2.7 percent with an overall revenue of $3,200,000,000. North America achieved good growth driven by meat and snacks, And in Latin America, we're pleased with our performance with good growth in Mexico and Brazil and a solid performance in Central America. The recent acquisitions of Fleishman, Southeastern Mills, and Ariaki also performed well. And we're really excited about the potential for these businesses and hope they complement our authentic taste and clean label offerings.
Moving on to Europe, we delivered a solid performance. With volume growth 2% and revenue of $1,500,000,000. With the beverage, meat and snack end use markets, all delivering good growth. We're also pleased with our performance in Russia and Eastern Europe, and we had strong growth in both beverage within the food service channel. And then moving on to APMEA, we delivered an excellent performance right across the region, with volume growth of 10.3% and overall revenue coming to 1.3 Village.
We're particularly pleased with our performance in Southwest Asia in the Middle East. And we also continue to make strategic investments for growth right across the region. And now moving on to Consumer Foods on Slide 8, It's been a year of solid underlying performance with a volume growth of 0.9% against what we had as a soft UK marketplace. Overall volumes were back 2.2%, reflecting the ready means contract exit as previously reported. And trading margins improved by 10 basis points with savings from the realignment program coming through as planned.
And in the second half of twenty nineteen, we successfully launched a number of meat free offerings on the Richmond brand and also the Naked Lori brands. And finally, before I hand you over to Margaret to give you some more detail on the financials, I'd just like to recap on our M and A activity for the year on Slide 9. We completed a total of 11 acquisitions in the year for a total consideration of CHF 562,000,000. And as many of you are aware, we're also involved in a well publicized transaction process in our sector. As you can see here from this slide, The acquisitions completed in the year were aligned to our strategic growth priorities of taste, nutrition, developing markets and food service.
And for us to carry M and A has always been a key part of our strategy. We believe we have a business model that has generated, and we'll continue to generate significant value for our stakeholders through M And A. So with that, I'll hand you over to Arbury.
Thank you, Edmund, and good morning, everyone. Over the next ten minutes or so, I will take you through our financial performance in more detail. For the full year 2019, the group achieved revenues of 7,200,000,000, trading profits of 903,000,000 and adjusted earnings per share of 2019, so a continuation of our consistent delivery and has been a very good year of solid financial performance. And to our financial highlights and our performance on each of our key financial metrics in turn, Firstly, we reported revenues of $7,200,000,000 in the year, up 9.6% including volume growth of 2.8 percent, impact of foreign currency and the contribution from acquisitions. Trading profits of 903,000,000, as I mentioned, which represented growth of 9.5% in constant currency.
We delivered good margin progression We grew constant currency adjusted Return on capital employed of 11.8 percent was in line with expectations, reflective of investments for growth and strategic acquisitions. And finally, we generated 1,000,000 of free cash flow, which represented 74% cash conversion. Now looking at our revenue growth performance on Slide 12. And taking each of our key measures at over 600,000,000 in the year. This growth was driven by a number of key elements.
Volume growth of 2.8 percent, as I mentioned, which was up over 1,000,000 in taste and nutrition. Overall, group pricing was flat in the year. Translation currency was a tailwind in the year in the order of 2.1%. And we had a strong contribution in the year of 4.7 percent from acquisitions or just over 300,000,000 The most notable of these were Fleishments, Southeastern Mills, Ariake, USA, and our expansion into the Middle East with ATCO. We are very pleased with the performance have further enhanced our authentic taste and clean label technology capabilities.
So overall, I would say a very good performance from a top line perspective. And to Slide 13, for a moment to look see our overall group revenue volume growth of 0.9% and an overall volume growth decline of 2.2% reflective of the Ready Meals contract exits that we have spoken about previously. Taste and Nutrition achieved good volume growth of 4%, a strong performance against the backdrop of a softer market volume growth rate. And you will see on the right hand side of this slide that firstly, this volume growth evolved across the course of the year. And secondly, we have continued to deliver consistent outperformance of market growth by more than 2%.
Turning now to our margin performance and our group trading margin bridge. We are pleased to report The key drivers were portfolio mix and operating leverage, which contributed in the order of 40 basis points. We continued to enhance our portfolio mix as we extended greater depth of technology into new products right across the globe. And we And you will see in the middle panel within our Keri Xcel program, we delivered efficiencies of 30 basis points from supply chain, logistics and functional cost savings, offset by investments for growth of 40 basis points These included investments in the localization of commercial leadership, further strengthening our technology expertise, and capability in developing markets, as well as the continued rollout of Carey Connect in North America. Acquisitions had a positive effect on group margin of 10 basis points in the year.
And in the final column of the margin bridge, as previously mentioned, we have grouped Brexit risk management costs of $8,000,000 or 11 basis points and the effect of the transition to IFRS 16 leases, which had a positive impact on a like for like basis of 3,400,000 or circa 5 basis points. So all in all, we are very pleased with the overall group margin expansion of 30 basis points for the year, which was underpinned by portfolio mix enhancements and operating leverage Turning now to free cash flow on Slide 15, another year of good cash conversion We generated free cash flow of 1,000,000 and cash conversion of 74% in the year. So looking at some of the component parts. Firstly, trading profit was up 1,000,000 to 903,000,000. Depreciation increased to 1,000,000, reflecting increased capital spenditure and the impact of IFRS 16.
Average working capital increased by 1,000,000 reflecting the investment in stocks as part of our Brexit risk management program, the increase in contingency stock in North America as we commenced the deployment of Carey Connect and the increased working capital reflecting the increased scale of the business. Finance costs and tax were both up reflecting the increased size of the business and recent acquisitions. Capital expenditure of $315,000,000 or 4.4 percent of revenue during the year which included upgrading and expanding our facilities in China, investing in our capabilities in the Middle East, and opening our new taste facility in India, which will serve our Southwest to Asia market. We continue to be disciplined So overall, a good free cash flow performance of 1,000,000 and cash conversion of 74%. Now moving to our debt profile on Slide 16.
Net debt was 1,900,000,000 atyearend up from 1,600,000,000 in 2018, reflective of acquisitions in the year and a very good net debt to EBITDA ratio of one 0.8 times. In June, we completed our 1,100,000,000 revolving credit facility, extended the maturity date to June 2024. And in September, we issued 10 years 1,000,000 bond notes, Our debt profile is in very good shape with no significant debt repayments until 2023, and the weighted average maturity profile of our debt is 5.9 years. So all in all, we continue to have a very strong balance sheet with a long maturity profile to enable our growth strategy. And finally, before I finish I would like to cover off a number of other financial matters on Slide 17.
Finance costs increased by $15,000,000, primarily due to acquisitions and the transition to IFRS 16 as mentioned. Our pension deficit of $9,000,000 is down from $44,000,000 in 2018, primarily driven by a strong return on assets, partially offset by the effect of the reduction in discount rates. Non trading items and net charge of million comprising 2 main items. Firstly, on acquisition integration and transaction related costs, We invested 48,000,000 on the integration of acquisitions and incurred transaction related costs of 18,000,000 reflecting costs on the transaction process that Edmund referenced earlier. We are very pleased with progress on the integration of acquisitions completed.
And secondly, the Consumer Foods Realignment Program as previously outlined with a net cost of $22,000,000 was completed during the year and delivered to plan. Moving to Keri Connect, we commenced the deployment in North America in the second half of twenty nineteen, I'm pleased to say that this is progressing well and will continue through 2020. On raw materials, input costs overall were neutral in the year with increases in serials and proteins being offset by decreases in spices, citrus and vanilla. And at this stage, the overall outlook is currently looking like low single digit inflation for 2020. And finally, on currency, The transition impact on adjusted EPS in 2019 was a tailwind of 3.1% and we are currently estimating a translation currency tailwind in the region of 2% to 3% on the EPS for 2020.
So I'll just wrap up the financial performance update briefly before I hand you back to Edmunds. I would say overall a period of very good, consistent performance as we continue to deliver particularly in developing markets, good overall group margin expansion of 30 basis points and good cash conversion and growth in our adjusted earnings per share as for outlook and future prospects.
Thanks, Marguerite. So before I share outlook for 2020, I'd just like to take a couple of minutes to revisit the evolving marketplace and just put some color and how we're partnering with our customers to deliver on our growth strategies. So turning to Slide 19, We've spoken previously about how everything starts at Cary with the consumer. And we've looked at how our marketplace and industry is changing rapidly. And how the accelerating consumer change is driving customer transformation and reshaping our entire industry.
And we've looked at different aspects of this change. And today, I want to look at how sustainability is driving change right across the end to end supply chain. Impacting consumers, customers and suppliers and how we at Terry are embracing this opportunity and embedding sustainability into our strategies and also into our ways of working. So now turning to Slide 20 to look at our sustainability strategy. And since the beginning, sustainability has been rooted in Carriage Heritage, an essential part of our company's growth and evolution.
Our company started as a community based cooperative, and this foundation set us on our journey to become the world's leading case nutrition company. Our commitment to sustainable development and innovation and our ability to create natural from food for our food solutions remains at the core of our business. And we're very proud of the achievements we've made today with our 2020 with our Tortoise 2020 program, but we know there's still much more to do. And to give some context, we estimate that every day there are more than 1,000,000,000 products can owned to contain a carry solution. And this provides a phenomenal platform for us to innovate to enable sustainable nutrition, which we can then use to co create solutions with customers for their consumers.
And examples are improving nutrition using lower impact ingredients, extending shelf life. Reducing emissions and waste through process technologies and creating more value from body products. And a recent example of this actually is where our enzyme technology was deployed as part of a solution to reduce food waste by almost 60% in a customer's leading baked product brands. When combined with our 2030 sustainability commitments, we will deliver a better impact for people, communities and mechanics. This all means a great deal to us at Cary.
It is core to our purpose and is all part of our aim to be our customer's most valued partner. And now turning to Slide 21. Where we just wanted to share with you some insights on the global beverage market. We carry our uniquely positioned as the nutrition and wellness partner, severing customers right across this dynamic market. This market is undergoing massive consumer led change with categories, subcategories and niche markets, all being redefined and reinvented.
Central to all this is the heightened consumer demand for beverages that deliver better for you, nutrition and wellness benefits. And this is playing out right across all beverage categories, be it frappies, kombucha, teas, coffees, hard seltzers or soft beers and soft spirits and the list goes on and on. And on this slide, we've included a few examples. And one I'd just like to pilot is the old traffic for food service. We partnered with our customers with our customer and leveraged our enzymes protein science, flavor and texture capability.
And combine this with our baristas and applications expertise. We created a great tasting, nutritious and on trend consumer solution for a subcategory that's forecasted to grow double digits. And now while we focused on beverage as the example for today, similar dynamics are at play, across a number of other categories from snack to meat to dairy. And this all presents exciting opportunities for carry going forward. So now looking and turning to the outlook for 2020 on Slide 22.
Just before I talk about the overall business, I wanted to speak about the ongoing developments relating to the coronavirus in China. Let me start by saying that our priority, 1st and foremost, is the health and safety of our people and their families. We have a really strong experienced team in China, and we've been supporting them through this difficult time. In addition, we're working together with the Chinese authorities, our customers and our suppliers as we navigate through the situation. As a result of these ongoing developments, we've included in our full year guidance an estimated impact in relation to our China business for the first quarter.
So now, turning to where we are overall as a business and looking out into the full year 2020. As we shared today, we had a very strong year in 2019. The volume growth building over the course of the year and has particularly strong finish in Q4. And we're very excited about the opportunities ahead. In taste and nutrition, we have strong growth prospects as we continue to further deploy our industry leading business model.
We believe we're best placed to support our customers as their co creation partner for sustainable nutrition. Within the Consumer Foods business, we'll selectively focus on growth opportunities. We've continued to invest for growth, and pursue M and A strategies aligned to our overall strategic growth priorities. So to close, and for the full year 2020, the group has a strong innovation pipeline. And we remain confident in our ability to continue We expect to achieve adjusted earnings per share growth of 5% to 9% on a constant currency basis.
So with that, we'll open the line for questions.
Thank Your first question comes from the line of Arthur Reeves from Barclays.
My first question is about your midterm guidance. You've several times this morning said that your performance was very strong, but in fact, volume growth was below the bottom end of your midterm guidance. Cash conversion was below your midterm guidance. Return on capital is below your midterm guidance. Is this a temporary thing caused by market circumstances?
Or actually are you now looking for the bottom end of the midterm guidance to be a very strong performance? That's my first question. Then second question, coming on to 2020, what sort of volume growth do you see supporting the, EPS growth you've guided us to, please?
Thanks, Arthur. I might kick off here and, Aubrey's might just come in after me. But maybe just to refer you back to the end use market page on the debt. And this is focusing on CNN for right now. The, the the volume growth in that page, if you can see, there's a wide range of end use markets there on the page with a wide range of of growth.
And if you look at the beverage end use market, the meat end use market, the snack end use market, and the Farm And Juice markets, each of them are performing really, really strongly. 8% to 9% snacking 9% beverage, it's 5 and pharmacy. So when I just take a step back and look at that performance, it certainly gives us a lot of confidence in terms of the growth trajectory of the business. This is our hard time giving you these These end use market for outright. In 2017, we outlined what our expectations were in the fight for our Pfizer plan in 2018.
We gave you a full year, look and in 2019 another 4 year look. And you can say you can see there's quite a bit of variability there. And that really gives us, I suppose, a good look at the challenges, but also the opportunities that are in front of us. So I think by any stretch, looking at all that list of end use markets and recognizing that there are challenges in the market. We continue to be confident about reaching and achieving our mid term targets.
In terms of 2020, look, we had a strong finish to the year. And we feel we're very well positioned going into 2020. And so as you're thinking about 2020, as we are 6 weeks into the year, maybe letting coronavirus aside for the moment, we'd expect our performance to be more or less in line with the 2019 performance. Okay. Thanks very much.
Thank you. Your next question comes from the line of Jason Wallins from Goodbody. Please go ahead. Your line is now open.
Hi, three questions, if you don't mind. Just kicking off there with China, can you maybe give me a better sense of your exposure by channel in the region and to be interested around the food service channel given what we've seen from the number of the QSRs in China and I had about to close-up a number of their sites and stores. Just on plant based, your statements have littered with commentary on the performance around plant based, Can you maybe talk a bit more about your capabilities, compared to your competitive set as such where, where carry differentiating yourselves in this field? And then just a final question really, given the impending IFF DuPont transaction, appreciate the deal won't close until 2021, but would welcome your thoughts on how you see that deal impacting the competitive dynamics in the marketplace. Given the size of that combined business?
Thanks, Jason. Maybe taking the last point first. I think that we're very confident about where we are as an organization. I think from a strategy perspective, it's business as usual for us. We have a great business, a great team of people.
We are in terms of our integrated solutions capability, like I kicked off at the very beginning of the call, I feel I feel it's I feel we're well ahead of the game there. Think everybody else has to work really hard to catch up with us. And of course, we're not going to stand where still where we are at. We're going to continue to evolve. So, we're not hugely concerned about, how the, how our competitors and how our peers are performing or what they're doing.
We're very focused in our business. Feel good about where we're at. And as I said, business as usual, we've a great strategy, a strong team, and we're We feel we've grown one way ahead of us. Maybe just then just to to touch back in China. As you probably know, it's a region.
A country that's very close to my heart, and I'm in regular contact with the team there. And we have a very strong team there. That team is very focused in, in, as well as getting our business back up and running there. In terms of food service and channels, and those types of things. We have said that our overall food service business represents 25% to 28% of our business.
And that's that's the same globally. There isn't a huge amount of difference in terms of, in terms of that, that weighting. I would say then in terms of the or plant based performance, Again, if you look at the performance in our meat and use market, again, a growth rate of 9% That business almost represents a quarter of our total business. And there is our performance and plan base is reflective primarily in that meat and use market. So if you think about the challenges that customers have and consumers have with plant based alternatives, It's primarily around taste, nutrition and texture.
And I believe we're extremely well placed in terms of helping customers to improve the quality of those products across those three areas.
Okay. Thank you very much.
Thank you. Your next question comes from the line of Heidi Vesterinen from Exane BNP Paribas. Please go ahead. Your line is now open.
I think last quarter when you spoke, you were a bit cautious on North America, but that seems to have turned out better than expected, but Europe had a bit of a slowdown. Could you talk about what happened in both markets, please? Thank you. That's my first question.
Thanks, Heidi. Look, I wouldn't call out anything specific as such. I'd maybe call out timing as opposed to anything else. I think in terms of, of North America, we wouldn't say that, from a market perspective, anything has really changed. Maybe about this time last year, we did see that inflation was impacted in the marketplace.
Nothing has really happened throughout the course of the year to change that. I think we had looked some good wins coming into the end of the year, and I feel we're well positioned going into 2020 as it relates to North America, in terms of Europe, Again, look, I wouldn't call out anything specific. We don't see any structural changes such in Europe Again, I'd put it down to a little bit of timing. And as you remember, we have called out in the past that, orders around, seasonal offerings and things like that might change from time to time. So, nothing, nothing over the ordinary to report really on Europe either.
And then the next question is on TN and margins. So you are currently lagging your midterm targets. Could you talk about why that's been? And what is the outlook from here? How do you think you'll be able catch up.
Thank you.
Hi, good morning, Heidi. I might take the win on the TNN margins. So firstly, I would say we're very pleased overall with the expansion of the margins in the current year. And as we look ahead to 2020, we do see continued opportunity to expand our margin, particularly, in terms of layering in technologies, very much aligned with some of the examples that Edmond shared earlier. So we see good, opportunity to expand our margins in 2020.
Somewhere above 20 in the region of 30 before we take into account the impacts of the coronavirus.
And then last question, please. You talked about your involvement in a well publicized transaction last year. So now that that's now gone, is that it for large M and A or do you still have other sizable targets in the pipeline? Thank you. That's my last question.
Thanks, Heidi. I suppose, look, we've never made a secret of the fact that, we run the rule across many many acquisition targets or potential acquisition targets or merger targets. And I think that strategy hasn't changed. We're, I think we have the confidence, the capability, we have the business model, to do acquisitions. We believe we're well supported from a shareholder standpoint.
I think we have shown discipline And I believe we've shown a strong track record in terms of delivering value for our shareholders. Ultimately, that's the that's the key measure here in terms of, how we evaluate acquisitions. So look, we remain open minded about any warranties that turn off regardless of scale.
Your next question comes from the line of James Targett from Berenberg. Please ahead. Your line is now open.
Hello. Good morning, everyone. A few questions from me. Firstly, as you just following up on the last question on M and A. I just wondered, regarding the DuPont acquisition, was it just a opportunistic moment for you to get involved in that deal, or, has that process or being involved in seeing shareholder reaction, seeing the opportunities that that acquisition presented, fundamentally changed your view towards doing large deals for Kery in terms of how successful they could be and your capabilities in doing that.
And then secondly, just on the free cash flow, obviously, the conversion is is improving and the Picasso is improving, but still below targets. Could you maybe talk about what's holding that back? And if it's areas like working capital, so you should carry connect rollouts and the Brexit integration program, is that to reverse as we go into 2020? We should see that free cash flow conversion improve? Thank you.
Thanks, James. I think, look, it's important to recognize that nothing has changed in terms of our strategy. When it comes to investments or acquisitions, I think, you know, maybe just reiterating maybe the point I just made that scale isn't going to frighten us here. I mean, when we see an opportunity, we will go for it. But again, it's we're going to take a disciplined approach.
We have a good track record of saying what we're going to do when doing it. You know, we will ensure that whatever business we look at is fully aligned to our strategy. And will deliver value for our customers and ultimately deliver value for our shareholders. So that is the, that is really the Arctic through which we, we measure ourselves and we measure any opportunity that we, that, that comes down to the table. I might let Margaret touching the free cash.
Sure. Good morning, James. So just taking your question on free cash flow, So as you know, the cash flow performance in FY2019 was very much in line with our guidance and reflected the impact earlier in the year of Brexit. And as you mentioned, the investments on Keri Connect. As we, as we think about the cash flow conversion for 2020.
And we're very focused on continuing that improvements trajectory. And we're focusing on improving the cash flow beyond the 74% closer to the 80% target. Again, just to mention, 2020 is a big year. Again, for, carry connect rollouts, we're extending, carry connect across North America. To over 25% in the year.
However, having said that, we're focused on reducing the working capital investment throughout the year to improve the overall cash conversion, as I mentioned.
Thanks. Can I just also just one final one just to clarify on China? You've talked about Could you maybe give some color on what you're baking in for your volume growth expectations in Q1 in that guidance? Because of coronavirus? Thanks.
And so maybe I'll take that one as well on China. So in the context of our function, we are at this point considering an impact of 0.5%, roughly 0.5% of C And M Revenues as a full year impact.
Okay. Thank you. Thank
you. Our next question from the line of Cathal Kenny from Davy Research. Please go ahead. Your line is now open.
Good morning. Folks, two questions from my side. Firstly, on food service. Looks like Q4, there was a marked acceleration, in volume growth. My math's reckon somewhere between 6% 7%.
Just wondering, can we get some detail on the drivers of that? And is that sustainable? And secondly, just on the snacking end use market, It looks like growth year over year there moves somewhere a little bit over 5% to 9%. And again, just can we get a little bit more detail on that market? Terms of geography or channel as to what's driving that growth?
Thank you.
Thanks, Tahul. Maybe firstly on food service, I might just refer you back to some of the examples we touched on in the presentation, let's say, the old frappe and food service, I think it's a very dynamic market. I think what we are seeing with the, whether it's the large QSRs, whether coffee chain, there's a lot of activity in terms of improving the nutritional quality of their menus and bringing more variety. And I think as we look at the beverage at the food service channel, we would say that the beverage market within the food service channel is probably most dynamic. And mean, it's an area that we're very well positioned to be able to, to grow our business in that particular area.
I wouldn't call out any region in food services being a little bit stronger or anything like that. Maybe I other than maybe North America is still a little bit subdued. But that said, within food service, beverage in North America would also be the most dynamic part of the menu. In terms of snacking, yeah, grit acceleration on our growth in snacking across the year, and a key driver of snacking is taste. So it goes to our Sprint and Authentic taste.
Again, I would call it pretty global, pretty global, I would say. That might be from a premium standpoint, there might be some regional differences, but ultimately, you know, if you consider snacks, you know, on small, bite size items, case is such an important part, while, you know, nutrition is also important, taste, I would say is most important in that end use market. And if you consider some of the acquisitions, whether it's, you know, Ariaki in terms of fall, authentic case area, That helps us. It helps us put together a fantastic building block, clean label building block, as it relates to that end use market.
Thank you.
Your next question comes from the line of Faran Baig Credit Suisse. Please go ahead. Your line is now open.
Good morning guys. A couple of questions from me as well, please. Can I start off with China? I think you just mentioned that, you're expecting a 50 basis point impact on TASAN Nutrition Revenues According to my math, that would suggest that, your revenues in China in Q1 are down 30%. Would that be a fair estimate?
And are you assuming that that those revenues are lost and unlikely to be gained in the latter part of the year? That's my first question. And secondly, second, more more of a housekeeping question, restructuring charges as a percentage of free cash flow, have went up in 2019 again. How we think about that, in 2020, but also in the medium term as well, do you expect restructuring costs to be a part and parcel of your business. And the final question, if I could squeeze it in, capital expenditure, How should we think about that in 2020 as well?
Thank you.
Thanks. So I take the question on China. And I your math is correct, in terms of, of how you outlined it there. So it's probably a little bit too early to say if there's going to be a bounce or anything like that at this stage. I mean, we have endeavored to measure the impact the situation on a daily basis.
We have 5 manufacturing facilities there. Those 5 manufacturing facilities are up and running as we speak. Now I wouldn't say they're up full tilt or anything like that, from a people perspective, we still are running very much on a skeleton, crew from a people perspective. So look, we're going to stay very close to it. And as things develop, we will, we will come back if there's any change.
But right now, we've measured it as best as we can, and share that with you.
And I might just take your 2 other questions. So firstly, on the non trading items. As I mentioned earlier, the non trading items in FY 'nineteen had a number of components, predominantly the M and A, integration related costs but also a transaction costs in relation to the the process that we mentioned And in 'nineteen, we also have costs associated with the Consumer Foods realignment program. So I think FY19 was slightly different to how we foresee FY20 too. And very much consistent with what we would have said in the past, our non trading items are very much dependent
on the
materiality of the acquisitions completed during the year. So at this juncture, we are necessarily calling out any significant acquisition related non trading item. Obviously, we'll update you as the year progresses. I'm sorry. Your final question was just on capital.
And so on capital, again, consistent with our strategy, we continue to invest in a very disciplined manner in relation to our key strategic growth areas. And as we think of capital for 2020, And we're looking at in the region of 4.5% maybe upwards to 5%, but in the region of 4% to 5%.
Great. Thanks.
Thank you. And your final question for now comes from the line of Charles Zieder from UBS. Please go ahead. Your line is now open.
Hi, good morning and then good morning, Marguerite. I just wanted to ask a question on the consumer business, please. So clearly, you've had a negative impact on volumes from the lost private label contract. But will you be looking to win new contracts this area going forward, or are you happy for this business to continue to shrink as a percentage of Kerry's overall business over time? Yeah.
I think we've made no secret of the fact that, our primary, the primary business in which where we'd providing capital will be our taste and nutrition business. That said though, I mean, I think it's important to recognize that we had a really strong Q4 in our Consumer Foods business with, volume growth of 1.6%. So that's, that consumer foods business. We've had very good business development in the year. Like we mentioned in the presentation, we launched 3 new plant based offerings, actually, all branded, 2 in the UK and 1 in 1 in Ireland.
So we're excited about that. So overall, look, the business is operating in a challenging environment, in a soft environment, primarily in the UK, But that said, it's performing in line with expectations and has a very strong team wrapped around that business. Thank you very much. So thanks, everyone, and thank you for joining the call. And we look forward to seeing you again when we present at CAGNY on Thursday.
So thank you.
That does conclude our conference for today. Thank you for participating. You may all now disconnect.