Glanbia sells stake in Nigeria's Nutricima for €29m
Irish multinational foods giant Glanbia has sold its stake in one of its African operations for approximately €29m.
The company said that the Nutricima plant in Nigeria no longer fits its strategic priorities. Nutricima was formed in a joint venture over ten years ago between Glanbia and UK firm PZ Cussons to supply evaporated milk and milk powder to the local market.
PZ Cussons, which manufactures personal health care products and consumer goods, has agreed to buy Glanbia's 50pc stake in Nutricima for a cash payment of £21m (€29m).
Nutricima generated profit before tax of approximately £1.3m in the financial year ended May 31, 2014.
Glanbia was responsible for operating the plant while PZ Cussons was responsible for the marketing and distribution of the product stream through its existing Nigerian subsidiary.
As part of the transaction, Glanbia Ingredients Ireland has now entered into a long-term agreement with Nutricima for the supply of dairy ingredients.
Siobhan Talbot, Glanbia's managing director, said: "We believe this is the right move for Glanbia at this time.
"The region remains a significant market for dairy ingredients, particularly enriched milk powders and we look forward to continuing the relationship with PZ Cussons through the new supply agreement with Glanbia Ingredients Ireland."
Goodbody's Stockbroker's noted that Nutricima contributes a tiny fraction of Glanbia's total earnings, but added that the sale was a "positive" development for the company.
The news comes on the day that EU milk quotas, which followed on from the EU's Common Agricultural Policy and the guarantee of milk prices, were abolished. Glanbia is now one of the firms which stands to gain from the removal of the quotas.
Mrs Talbot previously told the Irish Independent she thinks the removal of milk quotas will give a "very strong opportunity" to the Irish dairy industry. She said: "Dairy volatility is going to be there and isn't going to go away, but fundamentally we think global consumers respond to the nutritious profile of dairy products."
Glanbia Ingredients Ireland, a joint venture between Glanbia and Glanbia Cooperative Society that exports milk products, recently finished building a €150m milk processing factory in Co Kilkenny.
The announcement was billed as one of the largest investments by an Irish company in decades, and will provide direct and indirect employment for an estimated 1,600 people.
It is predicted that consumption of dairy products will increase globally over the coming years by up 20bn litres a year.