Monday 21 January 2019

Glanbia books €38m tax gain on Trump rate cut

Glanbia chief executive Siobhan Talbot said she was 'surprised' at a fall in the share price value
Glanbia chief executive Siobhan Talbot said she was 'surprised' at a fall in the share price value
John Mulligan

John Mulligan

Glanbia has booked a €38.7m exceptional tax credit due to US President Donald Trump's decision to slash the US corporate tax rate from 35pc to 21pc.

The reduced rate will also help push Glanbia's group-wide effective tax rate for 2018 to between 16pc and 17.5pc, compared to 17.6pc during 2017.

But shares in Glanbia fell more than 5pc yesterday, despite a solid set of 2017 financial results and a 65pc increase in its dividend payment.

CEO Siobhan Talbot told the Irish Independent that the fall in the shares was "somewhat surprising", and attributed it to likely concerns regarding foreign exchange headwinds.

"I think to the extent that it's anything, it's probably the US dollar piece," she said. Glanbia told investors that if the dollar-euro rate remains as is, it will result in about an 8pc translational headwind to constant currency results, which are reported in euro.

"The dollar is going to do its own thing ... but it has no impact on the fundamental strength and structures of our business."

She added: "For us it's really about driving forward the organisation strategically. We delivered all of our financial metrics. The reality is the market makes its own perspective on these things.

"Our organisation is really strong. We have a very strong balance sheet. We're very ambitious for the future."

Revenue from Glanbia's wholly-owned operations was up 7pc at €2.38bn. The figure was 9.2pc higher on a constant currency basis.

The company's earnings before interest, tax and amortisation of €283.2m from continuing operations was 3.6pc higher, and up 5.8pc on a constant currency basis.

Last year, Glanbia finalised a deal to sell its 60pc stake in a new venture called Dairy Ireland to the Glanbia Co-op. Glanbia now owns 40pc of a new joint venture between the pair, called Glanbia Ireland. Glanbia made an €83m profit on the sale of its 60pc stake in Dairy Ireland.

Glanbia Ireland's portfolio now includes brands such as Avonmore and Kilmeaden. The majority of Glanbia's milk-processing activity is now handled via joint ventures.

The group's wholly-owned activities are now focused on its nutritional performance and nutritional solutions businesses.

Glanbia's performance nutrition division generated revenue of €1.1bn last year, up 13.7pc on a constant currency basis. Its nutritionals business posted revenue of €1.26bn, up 5.4pc on a constant currency basis.

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