Glanbia beats expectations despite tough home market
THE fashionable food sector proved once again that it is capable of delivering positive surprises as Kilkenny-based Glanbia beat market expectations and upped its guidance for the rest of the year despite problems in its home market.
Shares in the company surged more than 6pc during trading yesterday after strong milk prices and its January takeover of US sports supplements company BSN helped push sales up by a third to €1.38bn, generating profits of €66m -- up 36pc year-on-year. Adjusted earnings per share (EPS) rose 55pc to 28.91c.
Despite the impressive numbers -- the company also increased its full-year guidance for EPS growth to 18-20pc as well as securing a $325m (€225m) debt facility -- the Irish consumer business remains loss-making.
Even after restructuring the consumer foods division, chief executive John Moloney said there was little hope for a recovery in the Irish market this year.
"The Irish food retail market continues to present a very challenging operating environment for food producers and suppliers in particular," he said.
"Buying power is consolidating as the number of multiples reduces and consumer confidence remains low. Promotional activity and discounting has become a permanent feature of market activity. In the first half of the year this put considerable pressure on our division and profits and margins declined year-on-year.
"Consumer Products also continued to rationalise its activities in the first half, which gave rise to an exceptional charge of €8.7m mainly relating to redundancies. Difficult market conditions are expected to prevail and a year-on-year decline in performance is expected in 2011," he added.
Outside of Ireland, however, it was a different story, with the Dairy Ireland business increasing revenue by 30pc mainly on demand from Asia. US Cheese and Global Nutritionals increased revenue by nearly 40pc to €675m. Margins from that business however were more than double the 4.7pc in Dairy Ireland.
"The demand . . . on the nutritionals side has been very strong," Mr Moloney said.
"Demand-led growth in global nutritionals is firmly based on sustainable long-term trends such as an increased focus on health and wellness, healthy active aging, healthier and more nutritious food options, diet or