Glanbia split delays dairy expansion plan
Published 22/02/2012 | 06:00
Differences at board level have delayed a decision from Glanbia on plans to expand its dairy processing facilities.
The disagreement centres on how much -- if anything -- the plc is prepared to invest in low-margin processing facilities.
A 50pc lift in supplies following the abolition of milk quotas in 2015 will leave Glanbia having to process up to 750m litres of additional milk.
This will require a major expansion in its processing capacity and need an investment of more than €200m.
However, it understood that Glanbia management is unwilling to commit this level of funding to an investment that is unlikely to operate on margins above 5pc when it has higher-margin options available elsewhere.
The company has announced it will invest €11.3m in a new cheese innovation centre in Idaho, USA, this year. Glanbia claims to be the world's biggest producer of American-style cheese.
Meanwhile, Dairygold is on track to complete a €6.5m investment in its Mogeely speciality cheese-processing plant by the end of April this year.
There were strong rumours in Glanbia circles this week that the company had offered the co-op a 60pc shareholding in the Food Ingredients Ireland arm of the business, comprised mainly of the processing plants at Ballyraggett and Virginia.