Glanbia's chief keeps options open on new Dairy Ireland deal
Published 26/08/2010 | 05:00
THE head of Glanbia yesterday refused to rule out a buy-back by the Co-op of its Dairy Ireland business.
Group Managing Director John Moloney described the deal, which was voted down by the co-op shareholders last May, as "dormant".
But he added that it was "a matter for the co-op and farmers to reawaken that debate if they think it's the appropriate thing to do".
"At the end of the day, the logic for the deal still exists on both sides. Milk quotas will go in 2015 and output could increase [after that] so if you asked any farmer if they would like to own all their assets they'd probably say yes," he said.
"On the Plc side, it would allow us to deleverage and focus on higher growth businesses. The Dairy Ireland business has improved. It's not a burden on the PLC and the focus is on driving the business forward in the interests of all the shareholders," he added.
Mr Moloney was speaking after Glanbia posted strong half-year results and raised its guidance for the rest of the year.
The company reported a 39pc jump in operating profit, up to €66.3m, on revenue that increased nearly 10pc to slightly more than €1bn. Adjusted earnings per share (EPS) of 18.62c were more than 50pc higher than in 2009.
The company said it was now expecting adjusted earnings per share growth of about 20pc for the full year.
The dividend of 3.03c is 5pc more than last year. The US Cheese & Global Nutritionals business was the main profit driver, accounting for 40pc of revenue but 61pc of profit.
For the rest of the year, Glanbia said, it expected to deliver "reasonable year-on-year growth, underpinned in particular by the performance of Global Nutritionals".
"In Dairy Ireland, performance will be somewhat mixed with Irish Dairy Ingredients strongly ahead compared with a loss in 2009, Consumer Products behind in the context of a very tough trading environment and Agribusiness marginally ahead of a difficult 2009," Mr Moloney said.
The Irish consumer business seems to be showing a "significant slowing in the rate of the decline" said Mr Moloney.
The results were welcomed by the market. Davy stockbrokers' John O'Reilly said an upgrade in the broker's forecast EPS was likely.
"The highlight in the H1 result may be the turnaround in dairy ingredients in Ireland but the robust top-line growth in US cheese, in the context of the US food sector, is no less noteworthy. We are likely to move forecast EPS for this year to about 37c -- a 6pc upgrade."
Glanbia's share price closed up 1.45pc at €3.43 at the end of trading in Dublin.