Glanbia profit results show last year's 'refusal' was a good call
Published 06/09/2011 | 05:00
There is a programme on BBC TV called Cash in The Attic. In it, people can unearth valuables which they almost forgot they had. I am reminded of this when I look at the latest sparkling half-year results from Glanbia plc. Turnover was up 33pc, profit rose 43pc and earnings per share were up 55pc.
Through the Glanbia Co-op Society, farmers still own 54pc of this cash cow. But it was a close shave. Had last year's proposed swap of Glanbia shares for Glanbia's Irish dairy and agribusiness gone through, farmer shareholders would be out of pocket to the tune of €200m today -- and that is only on share price.
Of course, one has to take a long-term view. But, for the foreseeable future, the big Glanbia profit potential lies with the US and global entities; the section that was being retained by the plc.
Operating margin in this section was at 10.4pc, more than double the 5pc margin in Glanbia's Irish-based business -- although a 5pc operating margin is still high by the norms of the Irish dairy processing sector.
We are told that the key to the Glanbia success in the US, and beyond, is the technology for harvesting the ingredients in whey. A few years ago, whey was a by-product of cheese which was fed to pigs.
Now it is the source of lifestyle and fitness nutritional products that are a must buy for every aspiring athlete. A remarkable 20pc of Glanbia's sales are now in products that were only developed in the past two-and-a-half years.
Over the years, Glanbia's constituent parts, Waterford and Avonmore, bought into enough duds. Now that farmers have their hands on a winner, they should hang in and watch it grow.
In proposing a swap of the Irish dairy and agribusiness for plc shares, coupled with the release of the co-op held plc shares, it is difficult to know what the men in plc suits were thinking. Indeed, time has shown that the 27pc who voted against the proposal to be wise men.